Last Friday the Treasury Department released its April International Capital Data Report (TIC). Too bad this report is two months in the rears. If only this report came out monthly as so many others do. Because this report shows where the insiders are taking the Market.
To understand this, let’s go back to April. On April 30th, the Market reached a double top, at 13279. The previous high was April 2nd. The entire first four months of the year, the Market was rallying, with no let up in sight. The Dow was well above its 200 moving average which was at less than 12,400. Retail customers were once again willing to invest. It appeared that the Dow would regain its pre-2008 levels.
With the release of the TIC report, forecasters fully expected to see some 45 Billion pouring in, across all U.S. equity sectors.
But what the TIC report revealed is not what was expected. In March, the month before the Market reached its double top, equity stock market purchases exceeded $7 billion, showing that, especially institutional investors, they fully expected the Market to keep the rally going.
But in April, the month that the Market reached its high, equity purchases fell from $7 billion to $2 billion. In the private sector where institutional investors are categorized, just $.5 billion. The institutional investors were selling in April.
In March, institutional investors were dumping U.S. Treasury bonds. They could not dump them fast enough, selling $13.8 billion. What a change for April, where those same investors bought over $22 billion bonds.
How did they know that the Market was going to drop 1200 points in a month? Oh to be a fly on the wall in those board rooms. Surely they knew. No institutional investor simply stops their course of action so abruptly without a reason. Who told them in advance?
The problem for retail investors is obvious. They don’t have the inside information that the institutional investors do. They are so often late to the party, and stay far too long. How many were forced to sell in May at a loss because they bought at the high in April? January, February and March the volume was extremely low. It was only really just April that saw the retail investors coming back into the Market, with trading volumes beginning to increase.
Barbara Cohen CIO, Shadowtraders, and professional day trader, specializes in teaching students how they can be trading futures with their own trading system and trading strategies. Ms. Cohen has helped hundreds of traders achieve their goals trading. Find out if trading futures is for you by attending one of Ms. Cohen’s Free Webinars. Check out my Futures Trading Articles. For more information, send an email to email@example.com or call 866-617-2037 today.