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Posted by on Sep 13, 2013 in AdvisorShares, Investment Perspective

U.S. Equity ETF Flows Send Bullish Signals Despite Recent Inflows

U.S. Equity ETF Flows Send Bullish Signals Despite Recent Inflows

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.

Leveraged Trades Also Set Bullish tone.

U.S. Equity ETFs took in $3.2 billion in the week ended September 10, reversing an $8.6 billion outflow the week before. Despite the latest inflows, these ETFs have shed $16.3 billion since the beginning of August, which is bullish in the short term from a contrarian perspective.

Leveraged Long Equity ETFs shed 13.7% of assets in the past week while Leveraged Short Equity ETFs added 1.8% of assets. Traders dumping leveraged long positions en mass while adding to short positions is a contrarian bullish signal, our studies find, because leveraged Stock ETF traders are usually poor market timers.

Stock and Bond MFs and ETFs Shed $3.2 Billion in September.

Stock and bond ETFs and mutual funds have given up a net $3.2 billion in September, adding to a $46.7 billion net outflow in August. Investors have redeemed a net $14.3 billion from Bond Mutual Funds this month, adding to a $35.3 billion outflow in August. Bond ETFs have taken in $3.5 billion this month, reversing a $7.6 billion outflow in August.

U.S. Stock ETFs have shed $1.0 billion this month, building on a $15.3 billion outflow in August. Stock Mutual Funds have taken in $701 million this month, reversing a $1.2 billion outflow in August.

Bond Mutual Fund Investors Sell Treasury, Muni, Corporate, and Foreign Debts Funds in Past 4 Weeks. 

All the major Bond Mutual Fund categories we track lost assets in the past four weeks. Treasury Bond Mutual Funds gave up $5.1 billion (2.4% of assets), Municipal Bond funds lost $2.5 billion (3.0% of assets), Corporate Bond funds shed $793 million (0.1% of assets), and Foreign Debt funds shed $60 million (0.1% of assets) over the past four weeks.

Investors Dump Real Estate Mutual Funds in Past 4 Weeks but Favor Health Funds. Value Eclipses Growth.

U.S. Stock Mutual Fund investors redeemed a net $309 million (1.8% of assets) in Real Estate funds and $67 million (1.2% of assets) in Natural Resources funds in the past four weeks. Investors bought $94 million (1.6% of assets) in Health funds and $24 million (0.5% of assets) in Precious Metals funds in the same time frame. Value-oriented Stock Mutual Funds took in $339 million in the past four weeks while Growth funds gave up $573 million.

NYSE Short Interest Up 1.5% in Past 30 Days, But Signal Appears Neutral.

Short interest on the New York Stock Exchange rose to 13.9 billion shares as of August 31, a 1.2% increase from 13.75 billion shares on August 15 and a 1.5% rise from 13.70 billion shares on August 1. A sustained increase in short interest would be a bullish signal from a contrarian standpoint, our studies find, but the recent rise is so small that it’s having only a neutral effect on the TrimTabs Demand Index.

Spec Traders More Bullish on Gold, Less Bullish on Nasdaq. Optimism on EUR/USD Dips. Bullish Bets on Oil Unchanged. Traders Less Bearish on 10-Year Treasuries, Neutral 2-Year Note.

Speculative traders grew more optimistic on gold futures last week as the long-short ratio climbed to 3.4-to 1 on September 3 from 3.3-to-1 the week before. Bullish bets on gold are up 182% since hitting an 11-year low of 1.2-to-1 on July 9.

Speculative traders’ bullishness on tech stocks eased last week as the long-short ratio on Nasdaq futures dipped to 5.0-to-1 from 5.1-to-1 the week before. The Nasdaq futures long-short ratio hit its highest point since December 2010 two weeks ago and is up 64.7% from an interim low of 3.0-to-1 on July 2.

Speculative traders’ bets on EUR/USD futures grew a bit less bullish as the long-short ratio dipped to 1.4-to-1 on September 3 from 1.6-to-1 the week before, the first decline in the past four weeks.

Speculative traders’ bets on oil futures leveled off last week as the long-short ratio closed at 3.7-to-1, unchanged from the week before. The oil futures long-short ratio is down 10.6% from the y-t-d peak of 4.1-to-1 set on July 30.

Speculative traders last week became a bit less bearish on the long end of the Treasuries curve but turned neutral on the short end. Bets on 10-year U.S. Treasury futures produced a short-long ratio of 1.3-to-1 on September 3, down from 1.4-to-1 the week before. The long-short ratio on two-year U.S. Treasury futures, meanwhile, closed at 1.0-to-1 last week, down from 1.2-to-1 the week before.

This communication is a publication of TrimTabs Asset Management. It should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. Information presented does not involve the rendering of personalized investment advice. Content should not be construed as an offer to buy or sell, or a solicitation of any offer to buy or sell the securities mentioned herein. Performance results for investment indexes and/or categories, generally do not reflect the deduction of transaction and/or custodial charges or the deduction of an investment-management fee, the incurrence of which would have the effect of decreasing performance returns. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Past performance may not be indicative of future results. Therefore, no investor should assume that the future performance of any specific investment or investment strategy will be profitable or equal to past performance levels. All investment strategies have the potential for profit or loss. Changes in investment strategies, contributions or withdrawals, and economic conditions, may materially alter the performance of an investor’s portfolio. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment or strategy will be suitable or profitable for an investor’s portfolio.

The AlphaBaskets blog provides frequent market insight and commentary by AdvisorShares Investments, LLC, created by AdvisorShares and other leading active managers.  AdvisorShares Investments is an SEC-registered investment adviser and the investment adviser to the AdvisorShares actively managed ETFs. The views expressed on AlphaBaskets should not be taken as investment advice or a recommendation for any of the actively managed ETFs advised by AdvisorShares.

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