Last week we pointed out a major bullish shift in investor sentiment readings toward stocks (see here). We suggested that if bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria, the surge in sentiment may be an indicator that we are in the fourth and final stage of the rally.
In another sign that the dominant mood in the market may be euphoria, Zerohedge relays a report from TrimTabs on fund flows into ETFs. TrimTabs is a research outfit focused on equity market liquidity. TrimTabs called the inflows into U.S. equity ETFs since the election the strongest buying volume they have ever seen.
TrimTabs Investment Research reported that U.S. equity exchange-traded funds issued a record $59.9 billion in December, easily surpassing the previous record of $50.7 billion in November.
“Investor appetite for U.S. equities is seemingly insatiable,” said David Santschi, chief executive officer of TrimTabs. “U.S. equity ETFs have had inflows on all but six trading days since the U.S. presidential election, and the buying volume has been by far the strongest we’ve ever seen.”
In its note, TrimTabs explained that the inflow of $110.6 billion into U.S. equity ETFs in November and December combined is equal to a stunning 7.2% of these funds’ assets.
Zerohedge has more.