No Fuel for a Lasting Rally

Mutual fund cash levels are near an all time record low. So where will the fuel come from to engender a sustainable rally in stocks? Linked here is a chart of mutual fund cash levels. When cash levels get around 4% (as they are today) stocks usually sell off; not rally. And the inverse is also true. Cash levels must also increase significantly before the bear market ends.

The rally of yesterday is being heralded as the death of the double-dip recession theory and the beginning of a new bull market. But where is that money to send the market higher going to come from? Investors can't tap the equity in their real estate holdings and they aren't going to get it from wage increases either.

Be careful not to get sucked into believing all is well.

And... There is the current bank run, I think were up to 90 bank closures this year alone plus, there is no credit being lent to small biz. To quote Gerald Celente: "There is no recovery, it's a cover-up". Submitted by Sabatino (not verified) on Sat, 2010/07/10 - 5:54pm » reply |