Lately there has been a lot of talk about a correction in the works that may hit the market sometime in September, and if we somehow survive this, then definitely October will be the month for the market to have a correction. The Media is making a big hype to caution investors about entering the market at this level, and analyst still yelling that we are going to drop another 15-20%. Are they right? Well who knows!? If they knew, would they be sharing this knowledge with us? Of course not!?
So what is next to come? Well honestly,I don't know, but what sectors are receiving billions in investment is something I do know. Money Market funds are still at record highs, and this light volume rally from May to now, means that there is still over $3 Trillion dollars on the sidelines. To be more precise, since March to now, Money Market funds have decreased from around 3.71 trillion to about 3.50 trillion earning less that .25% (right around fed funds rate). A bigger question to ask is where has this money been going? If you're saying to yourself, well of course the stock market, you are mostly right, and of course let us not forget the bond market. It's pretty obvious that in order for our economic stimulus to work, cash, or the US dollar, isn't the place to be, and risk appetite is starting to look attractive again if we are going to be in a low interest rate environment for at least the next 2-3 years.
Let's focus on what sectors have been outperforming the market. Materials is a sector that has outperform the market, and the very hot tech sector. It's up year to date around 55% and in these last 20-30 days there has been money movement into the Construction Material sub-sector, the Metals and Mining sub-sector (Explains the run on gold to $1000) and subsector paper and forest products. This has been the sector that has seen money in motion for the last 6 months, and probably will continue until early to mid next year. Click on the photo above to get a better view on how other sectors are doing.