Watch the Money Market Balances, Take III
This is only my 2nd Blog in the last 18 months. I'm learning how much I don't know. :-)
But I still think the Money Market Balances are very telling. Check them out here: http://www.ici.org/info/mm_data_2011.xls
Look at the 2nd column. For the last 6 weeks, while the Stock Market has been on a slow boat to the nether regions, MM balances have held steady. VERY interesting. I think it means people aren't "rushing the exits". Re-valuations are happening, but people aren't "panic selling". The gradual reduction in MM balances, over time, beginning in 1Q 2009, have more-or-less aligned with the increasing Stock Market. So these last 6 weeks are a bit of an oddity.
Either the panic selling will begin (and we'll see MM balances on the upswing again), causing catastrophically low (think March 2009) equity valuations, or the revaluations will level out and draw more money into the market, and the climb will continue.
So watch the MM balances - if you start to see another spike like March 2009, start picking up some cheap LEAPS options in quality companies selling at 5-to-8 times next year's earnings!