Fund managers have been so afraid of missing any stock market rally that they have run down their cash holdings to 3.6% of assets from nearly 6% a year ago. This is the largest decline in 19 years, meaning that equity cash ratios are back to where they were in September 2007, just as the stock market was hitting its peak.
And you can add to this worrysome figure the ultra bullish sentiment among US stock market Newsletters,
“Based on the several hundred investment advisers I track, I’d have to say that bullish sentiment is approaching dangerously high levels. Consider the Hulbert Stock Newsletter Sentiment Index (HSNSI), which represents the average recommended stock market exposure among a subset of short term stock market timers tracked by the Hulbert Financial Digest.
It currently stands at 62.8%, up from 13.8% just one month ago. That’s an awfully big jump for so short a period of time, especially considering that the Dow Jones Industrial Average rose a modest 4.4% over this period." Mark Hulbert
With no cash to further fuel this rally an important stock market top will be formed in the next few days, weeks.
Related ETF`s: SPDR S&P 500 ETF (Public, NYSE:SPY), ProShares UltraShort S&P500 (ETF) (Public, NYSE:SDS), ProShares UltraShort DJ-UBS Crude Oi ETF (Public, NYSE:SCO) and ProShares Ultra QQQ (ETF) (Public, NYSE:QLD)
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