Weekend Stock Market Analysis (ZT)

Weekend Stock Market Analysis

(5/12/12)

The % of cash held by Mutual Funds remains at all time lows as the latest reading was 3.3% which is far below the long term average of 6.8% (black line). Prior to the last Secular Bull Market which began in the early 1980's notice Mutual Funds had quite a bit of cash on hand as the red line stayed above well above the 6.8% level. However since the late 1990's the % of Mutual Fund cash has stayed below the long term average as we have been witnessing a Secular Bear Market. With the % of Mutual Fund Cash at historic lows it's hard to imagine a new Secular Bull Market can develop until they begin to build up higher cash levels.

Finally it wouldn't be a big surprise if the S&P 500 eventually tests its longer term upward trend line (black line) this Summer in the mid 1240's. Notice this trend line also intersects the 23.6% Retracement Level calculated from the March 2009 of 667 to the recent 1422 high as well.