Malaise
March 11, 2010 – 12:31 pm
There has been little in the way of news this week that would drive stock prices. That does not mean there is no news, only that the bits we are getting are not market movers one way or another.
We have had more mergers, a report on job openings hitting an 11 month high, talk about the health care bill and some upward revised estimates on earnings for the S&P 500 for this year. The market is rising but struggling without any catalyst to push it higher.
Something that is more basic and tells a story that is not good news for the average investor is that mutual fund investors are nowhere to be found. Money coming into funds is negligible despite the very good returns in the overall stock market. It might be that they just don’t have the money. However, if that was true why are we seeing retail sales rising and actual earnings for retail outlets doing very well?
I think it boils down to jobs and the unemployed. If you are not working you are not saving and in fact you are spending. That is an easy explanation but there is just one problem. The savings rate is around 4 to 5%. Where is that money going? If these savings start to move into mutual funds maybe the rally will be over. The last participant in a rally is usually the retail investor who waits too long.
Good Trading
Steve Peasley
