Art Cashin From The Floor Of The New York Stock Exchange On Why The Market Is Going Up, This Is A Real Head Scratcher

Posted By on December 4, 2009

Include Me Out – It looks like more and more equity investors are adopting the linguistically mangled posture of Samuel Goldwyn.  At least that’s what it looks like from the latest TrimTabs data.  Here’s how Mark Hulbert portrayed it in his MarketWatch column this morning:

And November turned out to be yet another in an incredible series of months in which, in the face of a rising stock market, mutual-fund investors on balance pulled money out of their stock mutual funds.

In fact, the trend during November was even starker than it was in previous months. And it was already pretty stark.

Consider the data, courtesy of TrimTabs Investment Research of Sausalito, CA: For the month of November, during which the Dow Jones Industrial Average rose an impressive 6.5%, the net withdrawal from domestic equity mutual funds amounted to $12.1 billion.

This came on top of withdrawals during the previous months of this rally. From the beginning of March through the end of October, according to TrimTabs, the net withdrawals totaled an additional $12.9 billion.

All told, therefore, from the beginning of March through the end of November, net withdrawals amounted to $25 billion.

By the way, don’t think that this pattern is caused by mutual-fund investors transferring to the increasingly popular world of exchange-traded funds. From the March lows through the end of November, according to TrimTabs, there also was a net withdrawal from domestic equity ETFs — amounting to some $8.5 billion.

Note carefully, furthermore, that during November there was acceleration in the pace with which fund investors pulled money out of the stock market.

Adding to the mystery is the frenzy of insider selling that has also accompanied this rally.

I cannot recall a period when that kind of selling occurred.  Early in a rebound rally, yes.  But after such a large up-move, we usually see investors move back in.  Maybe this is the new normal, after all.

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