Why This Market Upturn May Have Legs

The TSX has moved from its low of 7479 to over 10,000 in less than two months. Market sentiment has improved and bad news seems to be ignored by investors driving stocks ever higher.

I was emailed a very interesting chart relating to current and historical amounts of cash sitting on the sidelines in money market funds. In February, there was rougly $3.9 Trillion in US money market funds that represented 60% of the value of the S & P 500.

Today, with the markets increase, money market funds still have over 50% of the value of the S & P. Historically this percentage has averaged18.2%. 

As well, money market funds totalled approximately $2.0 Trillion. With rates nearing 0%, this money will eventually flow out creating tremendous upside potential for the market.

What are your thoughts? Do you think this market has the legs to continue higher?

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3 Responses

  1. With all the mixed information being given by people in the know, I would say that investing into the market at this time may be a suckers game plan. I would be cautious for the next month or two and see what is developing. You may want to cherrypick one or two stocks now but keep most of your money on the sidelines until things improve. Is this an okay strategy?

  2. OHH Great post! I’m loving your website;

  3. thanks and I would be cautious for the next month or two and see what is developing. market stock price

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