Eoin - does the source of daily volume in the stock market (buying or selling) influence your opinion of market strength or weakness at any point in time? Are there particular data sources you review which help you determine if institutional buyers/sellers are especially active? Does the trade-off between retail and institutional demand matter?

I always look forward to reviewing your insights on where markets may be heading in the near term...particularly in this ongoing era of excessive central bank intervention and manipulation.

Thank you.

Eoin Treacy's view

Thank you for your kind words and this email which may be of interest to the Collective. I don’t look at specific volume data but part of my mental process is to think about the market from the perspective of as many market participants as possible.

For example, when I participate in investment committee meetings at Nevada Trust Company we discuss issues like how to capture yield for income-hungry trusts and endowments. We talk about how to balance risks for income versus growth and I expect the same kinds of conversation are occurring in many different offices.

When I sit on calls with family offices that have done very well over the last decade, they see risk. Cash levels are high and 4% is a solid return for sitting and doing nothing; even as potential investments for a recovery are considered.

When I think retail traders, there is a sense of desperation. Inflation features highly in many of the conversations I have and people feel under pressure to take big risks to compensate them for what they are losing in real terms.

The unfortunate reality is retail traders are seldom ahead of the market for long. The meme/SPAC stock phenomenon was very emblematic of the last hurrah in this bull market. We are now in a sell the rallies environment because the Federal Reserve has to try and get inflation under control.
Amazon was one of the most popular buy the dip stocks over the last decade. It is breaking down to new lows today and the 200-day MA is on the cusp of crossing down through the 1000-day MA. The logical conclusion is the secular bull market in this stock is over.