The Fed Has Succeeded

The Investment Company Institute reported this week that for the first time in almost a year, there has finally been an inflow in domestic equity funds. All the major sentiment surveys are at extremes, and this new data point confirms that The Fed has succeeded in finally getting the retail investor to put his last dollar back into the market, allowing insiders to sell their remaining stakes at lofty prices.Insiders have been selling almost every single week at a clip of several hundred to one. Meanwhile no major investment outlet has a sell on the stock market for 2011. How can it be that the people who run these companies, with about as much inside information as you can get, are selling hand over fist, yet almost all analysts have been upgrading their market outlook? This new data point does not pass the smell test, and only confirms the myriad of other red flag signals popping up all over the place.

Chart 1: ICI Fund Flow Data