Equity ETF Flows Send Bullish Signals
Minyi Chen, CFA, Chief Operating Officer of TrimTabs Investment Research and Portfolio Manager of AdvisorShares TrimTabs Float Shrink ETF (NYSE Arca: TTFS) shares recent fund flow trends.
U.S. Equity ETFs Give up $4.3 Billion, Send Mildly Bullish Signal. Leveraged Trades Also Look Bullish.
- U.S. Equity ETFs gave up $4.3 billion in the week ended October 1, reversing a $3.4 billion inflow in the previous week. This week’s outflows signal low demand for stocks, a bullish short-term indicator from a contrarian perspective.
- Leveraged Long Equity ETFs gave up 0.5% of assets in the past week while Leveraged Short Equity ETFs added 0.9% of assets. Our studies find it’s a contrarian bullish sign when Leveraged Equity ETF investors unwind long bets and add shorts because these traders typically are poor market timers.
Stock and Bond MFs and ETFs Take in $23.2 Billion in September.
- Stock and bond ETFs and mutual funds finished September with a $23.2 billion net inflow, reversing a $42.9 billion outflow in August. Investors redeemed a net $11.7 billion from Bond Mutual Funds last month, adding to a $29.8 billion outflow in August. Bond ETFs took in $5.2 billion last month, reversing a $7.6 billion outflow in August.
- U.S. Stock ETFs took in $13.5 billion last month, reversing a $15.3 billion outflow in August. Stock Mutual Funds gave up $8.5 billion last month, more than tripling a $2.3 billion outflow in August.
Investors Buy Corporate and Foreign Bond ETFs in Past 4 Weeks but Sell Municipal and Treasury Funds.
- Corporate Bond ETFs took in $3.6 billion (6.1% of assets) in the past four weeks while Foreign Debt ETFs took in $158 million (1.0% of assets) in the same time frame. Investors sold an estimated $207 million (0.5% of assets) in Municipal Bond ETFs in the past four weeks and $130 million (0.1% of assets) in Treasury Bond ETFs.
Stock ETF Investors Buy Industrial, Sell Financial Funds in Past 4 Weeks. Growth ETFs Trump Value.
- U.S. Stock ETF investors in the past four weeks bought an estimated $1.3 billion (9.9% of assets) in Industrials ETFs and $870 million (8.2% of assets) in Consumer Cyclical ETFs. Investors sold an estimated $506 million (2.0% of assets) in Financial ETFs and $196 million (2.4% of assets) in Consumer Defensive funds in the past four weeks. Growth-oriented Stock ETFs added a net $1.4 billion in the past four weeks while Value ETFs shed $679 million.
Spec Traders’ Sentiment on EUR/USD and Nasdaq Hits 52-Week High. Traders Grow More Bullish on Oil and Gold but Less Bearish on 10-Year Treasuries and 2-Year Notes.
- Speculative traders grew much more bullish on EUR/USD futures last week as the long-short ratio jumped to 2.1-to-1 as of September 24, up 38.7% from 1.5-to-1 the week before. Sentiment on EUR/USD futures has bounced strongly since July 19, when the short-long ratio closed at 1.8-to- 1.
- Speculative traders’ bullishness on tech stocks hovered at a 52-week high last week as the long-short ratio on Nasdaq futures stood at 5.8-to-1, unchanged from the week before. The Nasdaq futures long-short ratio is up 91.1% from an interim low of 3.0-to-1 on July 2.
- Traders’ bets on oil futures grew more bullish last week as the long-short ratio climbed to 3.9-to-1 from 3.7-to-1 the week before. The oil futures long-short ratio is down 6.0% from the y-t-d peak of 4.1-to-1 set on July 30.
- Optimism on gold futures rose last week as spec traders pushed the long-short ratio to 2.8-to-1 on September 24 from 2.5-to-1 the week before. Bullish bets on gold are up 132% since hitting an 11-year low of 1.2-to-1 on July 9.
- Spec traders became a bit less bearish on both ends of the Treasuries curve last week. Bets on 10-year U.S. Treasury futures produced a short-long ratio of 1.3-to-1 on September 24, down from 1.7-to-1 the week before. The short-long ratio on two-year U.S. Treasury futures, meanwhile, edged down to 1.1-to-1 last week from 1.3-to-1 the week before.
Hedge Fund Managers Grew Less Bearish on Stocks in September.
- Hedge fund managers grew notably less bearish on U.S. stocks in the past month, according to the latest TrimTabs/Barclay Hedge Hedge Fund Sentiment Survey. Managers were substantially less bearish on U.S. Treasuries in September compared to August but a majority of them were neutral on the U.S. Dollar Index.
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