From the desk of Willie Delwiche.
Key Takeaway: The bulls are raising their voices in excitement. For the first time this year, momentum and breadth are improving in tandem. Despite the bullish developments in recent weeks, the structural trend remains lower. This newfound optimism builds upon months of selling pressure replaced by broadening pockets of near-term strength. Now that the ball is in the bull's court, they have to do something with it. This means proving they have what it takes to stay in the game, and that we’re experiencing strength beyond an oversold bounce.
Sentiment Report Chart of the Week: Investors Finding A New Dance Partner?
It would be premature to suggest that the long-running (and recently renewed) love affair that investors have with equities has reached an end. Equity funds continue to see inflows and the monthly AAII asset allocation survey shows household equity exposure remaining in the mid-60’s despite consumer sentiment holding near historic lows. But at the margin, there is building interest elsewhere. Bond fund inflows in July outpaced stock fund inflows for only the second time since mid-2020 and over the past seven weeks, inflows to US bond funds have outpaced inflows to US stock funds by better than 7 to 1.
