Why There’s Still Room in this Rally

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Why There’s Still Room in this Rally
According to the ICI, investors redeemed $28 million from domestic equity mutual funds as prices rose during the first quarter
and an additional $29.3 million in April and May, the most recent period for which complete data are available.
According to the firm Dealogic, both individual and institutional investors during the first quarter, the most recent period for which complete data are available, purchased more debt than ever from companies
and governments, almost $180 billion dollars in fact.
It gained another 5.5 percent over the first quarter this year
and rose almost another 2.5 percent from April-June, slower than before but still respectable.
Either way, such patterns have made clear that equity investors remain far from any kind of undue exuberance.
Instead of undue enthusiasm, they tell that investors, despite past price gains, remain wary of equities and imply
that ample buying power remains to carry the rally further.
During this time, they bought almost $80 billion in junk bonds, double the amount they bought during this time last year.
But at least market tacticians can dismiss the dangers of undue exuberance among equity investors
Second, and more immediately significant, investors show no inclination to chase past equity price gains
and in the process set the market up for a correction.
And it seems that the pace of bond buying picked up through April, though complete data are not yet available.

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