We continue to see “non believer” funds starting to flow into equities but not to any point where we need to be concerned yet .. Our HEDGEFUND EXPOSURE indicator finally has exited the “bullish zone” recently & we can see the BULL/BEAR indicator creep away from that coveted zone as well .. Pretty obvious that all of the funds that are coming into equities, are going into Nasdaq issues .. These red-hot, disruptive, new economy leaders have been scorching, and for good reason .. That’s where all the hot growth is & the fear of Covid only makes these businesses stronger .. The meltup scenario has already been well underway in these stocks as players have shown little interest in waiting for pullbacks or rotating into anything else .. Eventually these stocks will correct at some point but for now, this is where all the momentum, flow & strong price action resides .. As has been the recent playbook, look for tactical opps off aggressive buying in these names, especially into any weakness .. What I’ve been doing as well, is looking at under the radar smaller plays in these groups, which catch some sweeper activity ..


Aggressive buying out there today as action started off with a bang right from the opening bell .. Call buyers remained active into the afternoon for a change .. The top order flow continues to show up in familiar names & sectors .. China related issues, which have scorched of late, seeing players scramble for exposure in these names .. A promising sign into the late afternoon as selective cyclicals finally attract some play .. Yes, it’s likely just some earnings positioning but you could immediately see the tone of the rally change & will create additional upward momentum if it continues in coming days ..

Short term sentiment bounced back with the rally today but leaves plenty room for further upside, if they want it .. Its official, HEDGEFUNDS are creeping into equities & are net long as of tonight’s update .. We can see them in the daily order flow chasing the hot names all over the yard .. Nothing to be concerned about yet but enough for our signal to go from bullish to favorable as the indicator exits bullish territory .. Daily Sentiment Index sitting in the upper 80’s is not a concern with the rest of intermediate sentiment at current levels .. That DSI has been seen at 95%+ in plenty of rallies of the past .. As we’ve discussed recently, plenty eyeballs on VIX & a potential meltdown in volatility, which could finally get the CTA & trend following crowd aggressively involved.