With the recent spike in volatility in global markets, extreme readings have shown up as investors yank money out of stock funds at near record pace.
Investors Yank Money Out Of Stock Funds
May 15 (King World News) – The following is from Jason Goepfert at SentimenTrader: The selling pressure over the past couple of weeks has been taken seriously by investors, at least based on a couple of different measures.
Many of the index, sector, and country ETFs that we follow lost at least $25 million in assets on Tuesday. That’s one of the largest, and broadest, exits in years. Ever, really. And it wasn’t just Tuesday…
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Over the past 10 days, a total of more than $20 billion has left these funds. That’s the most since last February and among the most in at least 15 years when many of these funds came into existence (see chart below).
Investors Pull $20 Billion Out Of Stock ETFs
Fund flows are fickle and influenced by price action. That price action has been horrendous, with traders waking up to large pre-market losses almost every day for nearly two weeks.
On the next page, we can see the 10-day average percentage change in S&P 500 e-mini futures an hour before the open, and also the average opening gap in the large S&P 500 contract (see chart below).
S&P Panic Trading Before The Bell
Both are at levels seen only three other times since the financial crisis. While losses were (of course!) larger during that collapse, outside of that time period we’ve seen few times with more pre-market panic than we’ve witnessed lately. That should be extreme enough to be a positive here.
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