Here are some charts that caught my eye recently.
First up, the SPX has been finding trouble near it’s 50-day moving average recently. This after finding support from this trendline multiple times the first half of 2013. Also, the trendline from the November lows could act as resistance going forward as well. It is tough to get extremely bullish here without clearing these levels.
One thing that is encouraging about the recent 5% dip is the amount of fear it has produced. As Todd noted over the weekend, put/call ratios are flashing some bullish signals. The equity put/call ratio is up near previous peaks and roll overs have been bullish.
Next up is data from the ISE. They use a call/put ratio and the 10-day moving average of All Securities and Equity Only are near the lowest levels since 2008. Again, this doesn’t mean we blindly buy here, but it does suggest fear is growing and that is a good sign.
Next up is margin debt. The theory goes when everyone is on margin they love stocks and the littlest pullback can lead to exaggerated selling. More selling leads to margin calls and pretty soon you have a crash. I’m guessing it isn’t that simple, still, one look at the chart below and you have to take pause.
Lastly, the action in mutual fund flows is very interesting. Yes, nearly everyone uses ETFs anymore and mutual funds are a dying industry. Still, June once again saw more outflows from domestic equity mutual funds, according to the ICI.
In fact, so far in 2013 there have been just $7.0 billion inflows to domestic mutual funds. This after the best start to a year since 1999! From 2007 to 2012, $611 billion left domestic mutual funds. That means the $7 billion inflows this year shows just 1% have come back.
The real action was in bonds, which cracked big time in June. We’ve said for a long time now that bonds are a very crowded trade and this can be dangerous. Well, $32.3 billion left bond funds last month. Sounds like a lot, right? Not when you consider $1.3 trillion were invested in bond funds from 2007 through May 2013. That comes out to just 2.51% of the previous huge inflows were pulled out last month. There still could be a lot of pain for the bond crowd there.