MTA Educational Foundation University Course – Technical Analysis of the Financial Markets ©2009

Lecture 10 - Sentiment & Supply/Demand1

This lecture series is produced by the Market Technicians Association

Educational Foundationbased on the detailed class notes

of Charles D. Kirkpatrick II, CMT Copyright © 2009.

All rights are reserved.

Flow of Funds: Net Change in Supply of Stock

12/30/08

-600

-400

-200

0

200

400

600

800

Dec-84 Dec-87 Dec-90 Dec-93 Dec-96 Dec-99 Dec-02 Dec-05 Dec-08 Dec-11

$Billions

Dec-

80

Dec-

82

Dec-

84

Dec-

86

Dec-

88

Dec-

90

Dec-

92

Dec-

94

Dec-

96

Dec-

98

Dec-

00

Dec-

02

Dec-

04

Dec-

06

Dec-

08

4 Quarter Moving Average

$B

illi

on

s

MTA Educational Foundation University Course – Technical Analysis of the Financial Markets ©2009

Lecture 10 - Sentiment & Supply/Demand2

This lecture series is produced by the Market Technicians Association

Educational Foundationbased on the detailed class notes

of Charles D. Kirkpatrick II, CMT Copyright © 2009.

All rights are reserved.

Flow of Funds: Households

0

10000

20000

30000

40000

50000

Apr-84Apr-86Apr-88Apr-90Apr-92Apr-94Apr-96Apr-98Apr-00Apr-02Apr-04Apr-06Apr-08Apr-10Apr-12

$Billions

10

15

20

25

30

35

Per

ce

nt

Equity Percent

Total Financial Assets

Dec

-80

Dec

-82

Dec

-84

Dec

-86

Dec

-88

Dec

-90

Dec

-92

Dec

-94

Dec

-96

Dec

-98

Dec

-00

Dec

-02

Dec

-04

Dec

-06

Dec

-08

12/30/08

50

40

30

20

10

0

$T

rill

ion

s

MTA Educational Foundation University Course – Technical Analysis of the Financial Markets ©2009

Lecture 10 - Sentiment & Supply/Demand3

This lecture series is produced by the Market Technicians Association

Educational Foundationbased on the detailed class notes

of Charles D. Kirkpatrick II, CMT Copyright © 2009.

All rights are reserved.

Flow of Funds: State & Local Government Employee Retirement Funds

0

500

1000

1500

2000

2500

3000

3500

4/1/8410/1/85

4/1/8710/1/88

4/1/9010/1/91

4/1/9310/1/94

4/1/9610/1/97

4/1/9910/1/00

4/1/0210/1/03

4/1/0510/1/06

4/1/0810/1/093/31/1110/1/12

$Billions

10

20

30

40

50

60

70

80

Percent

Equity Percent

Total Financial Assets

Dec

-80

Dec

-82

Dec

-84

Dec

-86

Dec

-88

Dec

-90

Dec

-92

Dec

-94

Dec

-96

Dec

-98

Dec

-00

Dec

-02

Dec

-04

Dec

-06

Dec

-08

12/30/08

$B

illi

on

s

Per

ce

nt

MTA Educational Foundation University Course – Technical Analysis of the Financial Markets ©2009

Lecture 10 - Sentiment & Supply/Demand4

This lecture series is produced by the Market Technicians Association

Educational Foundationbased on the detailed class notes

of Charles D. Kirkpatrick II, CMT Copyright © 2009.

All rights are reserved.

Net Purchases of U.S. Equities by Foreign Investors minus Net Purchases of Foreign Equities by U.S. Investors

December 08

-60

-40

-20

0

20

40

60

80

100

Apr-84 Apr-86 Apr-88 Apr-90 Apr-92 Apr-94 Apr-96 Apr-98 Apr-00 Apr-02 Apr-04 Apr-06 Apr-08 Apr-10 Apr-12

$Millions

Dec

80

Dec

82

Dec

84

Dec

86

Dec

88

Dec

90

Dec

92

Dec

94

Dec

96

Dec

98

Dec

00

Dec

02

Dec

04

Dec

06

Dec

08

$B

illi

on

s

MTA Educational Foundation University Course – Technical Analysis of the Financial Markets ©2009

Lecture 10 - Sentiment & Supply/Demand5

This lecture series is produced by the Market Technicians Association

Educational Foundationbased on the detailed class notes

of Charles D. Kirkpatrick II, CMT Copyright © 2009.

All rights are reserved.

Net Purchases of U.S. Equities by Foreign Investors

12/30/08

-20,000

0

20,000

40,000

60,000

80,000

100,000

Apr-84 Apr-86 Apr-88 Apr-90 Apr-92 Apr-94 Apr-96 Apr-98 Apr-00 Apr-02 Apr-04 Apr-06 Apr-08 Apr-10 Apr-12

$Millions

Dec

80

Dec

82

Dec

84

Dec

86

Dec

88

Dec

90

Dec

92

Dec

94

Dec

96

Dec

98

Dec

00

Dec

02

Dec

04

Dec

06

Dec

08

100

80

60

40

20

0

-20

$Bill

ion

s

MTA Educational Foundation University Course – Technical Analysis of the Financial Markets ©2009

Lecture 10 - Sentiment & Supply/Demand6

This lecture series is produced by the Market Technicians Association

Educational Foundationbased on the detailed class notes

of Charles D. Kirkpatrick II, CMT Copyright © 2009.

All rights are reserved.

Net Purchases of Foreign Equities by U.S. Investors

12/30/0812/30/08

-50,000

-40,000

-30,000

-20,000

-10,000

0

10,000

20,000

30,000

40,000

50,000

Apr-84Apr-86Apr-88Apr-90Apr-92Apr-94Apr-96Apr-98Apr-00Apr-02Apr-04Apr-06Apr-08Apr-10Apr-12

$Millons

Dec

80

Dec

82

Dec

84

Dec

86

Dec

88

Dec

90

Dec

92

Dec

94

Dec

96

Dec

98

Dec

00

Dec

02

Dec

04

Dec

06

Dec

08

50

40

30

20

10

0

-10

-20

-30

-40

-50

$Bill

ion

s

MTA Educational Foundation University Course – Technical Analysis of the Financial Markets ©2009

Lecture 10 - Sentiment & Supply/Demand7

This lecture series is produced by the Market Technicians Association

Educational Foundationbased on the detailed class notes

of Charles D. Kirkpatrick II, CMT Copyright © 2009.

All rights are reserved.

New Equity Financing

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

Jan-84Jan-86Jan-88Jan-90Jan-92Jan-94Jan-96Jan-98Jan-00Jan-02Jan-04Jan-06Jan-08Jan-10Jan-12

$Millions

0

50

100

150

200

250

300

350

Totals

February 2009

Monthly

12-Month Total

Dec

-80

Dec

-82

Dec

-84

Dec

-86

Dec

-88

Dec

-90

Dec

-92

Dec

-94

Dec

-96

Dec

-98

Dec

-00

Dec

-02

Dec

-04

Dec

-06

Dec

-08

12

-Mo

nth

To

tals

350

300

250

200

150

100

50

0

$B

illi

on

s

MTA Educational Foundation University Course – Technical Analysis of the Financial Markets ©2009

Lecture 10 - Sentiment & Supply/Demand8

This lecture series is produced by the Market Technicians Association

Educational Foundationbased on the detailed class notes

of Charles D. Kirkpatrick II, CMT Copyright © 2009.

All rights are reserved.

Secondary Distributions: Value

4/24/09

1

10

100

1000

10000

1/7/88 1/7/90 1/7/92 1/7/94 1/7/96 1/7/98 1/7/00 1/7/02 1/7/04 1/7/06 1/7/08 1/7/10 1/7/12

$Millions

52-Week Moving Average

2/1

5/8

1

2/1

5/8

3

2/1

5/8

5

2/1

5/8

7

2/1

5/8

9

2/1

5/9

1

2/1

5/9

3

2/1

5/9

5

2/1

5/9

7

2/1

5/9

9

2/1

5/0

1

2/1

5/0

3

2/1

5/0

5

2/1

5/0

7

2/1

5/0

9

MTA Educational Foundation University Course – Technical Analysis of the Financial Markets ©2009

Lecture 10 - Sentiment & Supply/Demand9

This lecture series is produced by the Market Technicians Association

Educational Foundationbased on the detailed class notes

of Charles D. Kirkpatrick II, CMT Copyright © 2009.

All rights are reserved.

Margin Debt versus % of Market Value

Margin Debt

% of Market Value

0

100

200

300

400

500

600

Jan-81Jan-87Jan-89Jan-91Jan-93Jan-95Jan-97Jan-99Jan-01Jan-03Jan-05Jan-07Jan-09Jan-11 Jan-13

$Millions

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

2/1

5/8

1

2/1

5/8

3

2/1

5/8

5

2/1

5/8

7

2/1

5/8

9

2/1

5/9

1

2/1

5/9

3

2/1

5/9

5

2/1

5/9

7

2/1

5/9

9

2/1

5/0

1

2/1

5/0

3

2/1

5/0

5

2/1

5/0

7

2/1

5/0

9

February 09

$B

illi

on

s

MTA Educational Foundation University Course – Technical Analysis of the Financial Markets ©2009

Lecture 10 - Sentiment & Supply/Demand10

This lecture series is produced by the Market Technicians Association

Educational Foundationbased on the detailed class notes

of Charles D. Kirkpatrick II, CMT Copyright © 2009.

All rights are reserved.

Insider Sell/Buy Ratio

4/24/09

Ind

ex

Bearish

Bullish

8-Week Moving Average

S&P 500

MTA Educational Foundation University Course – Technical Analysis of the Financial Markets ©2009

Lecture 10 - Sentiment & Supply/Demand11

This lecture series is produced by the Market Technicians Association

Educational Foundationbased on the detailed class notes

of Charles D. Kirkpatrick II, CMT Copyright © 2009.

All rights are reserved.

Equity Mutual Funds: Cash Percentage of Net Assets

February 09

2

4

6

8

10

12

14

Feb-84Feb-86Feb-88Feb-90Feb-92Feb-94Feb-96Feb-98Feb-00Feb-02Feb-04Feb-06Feb-08Feb-10Feb-12

Percent

Jan

80

Jan

82

Jan

84

Jan

86

Jan

88

Jan

90

Jan

92

Jan

94

Jan

96

Jan

98

Jan

00

Jan

02

Jan

04

Jan

06

Jan

08

MTA Educational Foundation University Course – Technical Analysis of the Financial Markets ©2009

Lecture 10 - Sentiment & Supply/Demand12

This lecture series is produced by the Market Technicians Association

Educational Foundationbased on the detailed class notes

of Charles D. Kirkpatrick II, CMT Copyright © 2009.

All rights are reserved.

Sales (Including Reinvested Dividends) and Redemptions of Equity Mutual Funds

February 09

Sales

Redemptions

0

20000

40000

60000

80000

100000

120000

140000

160000

180000

200000

Jan-86 Jan-88 Jan-90 Jan-92 Jan-94 Jan-96 Jan-98 Jan-00 Jan-02 Jan-04 Jan-06 Jan-08 Jan-10 Jan-12

$Billions

Jan

82

Jan

84

Jan

86

Jan

88

Jan

90

Jan

92

Jan

94

Jan

96

Jan

98

Jan

00

Jan

02

Jan

04

Jan

06

Jan

08

200

180

160

140

120

100

80

60

40

20

0

$B

illi

on

s

MTA Educational Foundation University Course – Technical Analysis of the Financial Markets ©2009

Lecture 10 - Sentiment & Supply/Demand13

This lecture series is produced by the Market Technicians Association

Educational Foundationbased on the detailed class notes

of Charles D. Kirkpatrick II, CMT Copyright © 2009.

All rights are reserved.

February 09

-60,000

-40,000

-20,000

0

20,000

40,000

60,000

Jan-86 Jan-88 Jan-90 Jan-92 Jan-94 Jan-96 Jan-98 Jan-00 Jan-02 Jan-04 Jan-06 Jan-08 Jan-10 Jan-12

$Millions

Jan

82

Jan

84

Jan

86

Jan

88

Jan

90

Jan

92

Jan

94

Jan

96

Jan

98

Jan

00

Jan

02

Jan

04

Jan

06

Jan

08

60

40

20

0

-20

-40

-60

$B

illi

on

s

Net Sales of Equity Mutual Funds (Including Reinvested Dividends)

MTA Educational Foundation University Course – Technical Analysis of the Financial Markets ©2009

Lecture 10 - Sentiment & Supply/Demand14

This lecture series is produced by the Market Technicians Association

Educational Foundationbased on the detailed class notes

of Charles D. Kirkpatrick II, CMT Copyright © 2009.

All rights are reserved.

Net Exchanges into Equity Mutual Funds

February 09

-25000

-20000

-15000

-10000

-5000

0

5000

10000

15000

Dec-90 Dec-92 Dec-94 Dec-96 Dec-98 Dec-00 Dec-02 Dec-04 Dec-06 Dec-08 Dec-10 Dec-12

$Millions

Jan

86

Jan

88

Jan

90

Jan

92

Jan

94

Jan

96

Jan

98

Jan

00

Jan

02

Jan

04

Jan

06

Jan

08

Monthly

15

10

5

0

-5

-10

-15

-20

-25

$B

illi

on

s

MTA Educational Foundation University Course – Technical Analysis of the Financial Markets ©2009

Lecture 10 - Sentiment & Supply/Demand15

This lecture series is produced by the Market Technicians Association

Educational Foundationbased on the detailed class notes

of Charles D. Kirkpatrick II, CMT Copyright © 2009.

All rights are reserved.

Equity Mutual Funds: Total Flows

February 09

-80000

-60000

-40000

-20000

0

20000

40000

60000

80000

Jan-86 Jan-88 Jan-90 Jan-92 Jan-94 Jan-96 Jan-98 Jan-00 Jan-02 Jan-04 Jan-06 Jan-08 Jan-10 Jan-12

$Millions

Jan

82

Jan

84

Jan

86

Jan

88

Jan

90

Jan

92

Jan

94

Jan

96

Jan

98

Jan

00

Jan

02

Jan

04

Jan

06

Jan

08

Monthly

80

60

40

20

0

-20

-40

-60

-80

$B

illi

on

s

MTA Educational Foundation University Course – Technical Analysis of the Financial Markets ©2009

Lecture 10 - Sentiment & Supply/Demand16

This lecture series is produced by the Market Technicians Association

Educational Foundationbased on the detailed class notes

of Charles D. Kirkpatrick II, CMT Copyright © 2009.

All rights are reserved.

Equity Mutual Funds: Net Purchases of Common Stock

-50000

-40000

-30000

-20000

-10000

0

10000

20000

30000

40000

50000

Feb-88 Feb-90 Feb-92 Feb-94 Feb-96 Feb-98 Feb-00 Feb-02 Feb-04 Feb-06 Feb-08 Feb-10 Feb-12

$Millions

Jan

84

Jan

86

Jan

88

Jan

90

Jan

92

Jan

94

Jan

96

Jan

98

Jan

00

Jan

02

Jan

04

Jan

06

Jan

08

February 09

Monthly

50

40

30

20

10

0

-10

-20

-30

-40

-50

$B

illi

on

s

MTA Educational Foundation University Course – Technical Analysis of the Financial Markets ©2009

Lecture 10 - Sentiment & Supply/Demand17

This lecture series is produced by the Market Technicians Association

Educational Foundationbased on the detailed class notes

of Charles D. Kirkpatrick II, CMT Copyright © 2009.

All rights are reserved.

S&P 500 Dividend Yield vs. Price / Earnings Ratio

Yie

ld

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

Jan-86 Jan-88 Jan-90 Jan-92 Jan-94 Jan-96 Jan-98 Jan-00 Jan-02 Jan-04 Jan-06 Jan-08 Jan-10 Jan-12

Ratio

0.0

7.0

14.0

21.0

28.0

35.0

42.0

49.0

Jan

82

Jan

84

Jan

86

Jan

88

Jan

90

Jan

92

Jan

94

Jan

96

Jan

98

Jan

00

Jan

02

Jan

04

Jan

06

Jan

08

March 09

Dividend YieldP/E Ratio

MTA Educational Foundation University Course – Technical Analysis of the Financial Markets ©2009

Lecture 10 - Sentiment & Supply/Demand18

This lecture series is produced by the Market Technicians Association

Educational Foundationbased on the detailed class notes

of Charles D. Kirkpatrick II, CMT Copyright © 2009.

All rights are reserved.

ISE 10-Day Put/Call Ratio

Ind

ex

S&P 500

10-Day Ratio

4/24/09

MTA Educational Foundation University Course – Technical Analysis of the Financial Markets ©2009

Lecture 10 - Sentiment & Supply/Demand19

This lecture series is produced by the Market Technicians Association

Educational Foundationbased on the detailed class notes

of Charles D. Kirkpatrick II, CMT Copyright © 2009.

All rights are reserved.

Options Clearing Corp. (OCC) Equity Option Premium Put/Call Ratio vs. NYSE Composite

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

1/13/941/12/951/11/961/9/971/8/981/14/991/13/001/11/011/10/02

1/9/031/8/041/6/051/5/061/4/0712/27/0712/25/0812/24/0912/23/1012/22/1112/20/12

Percent

0

200

400

600

800

1000

1200

1400

1600

1800

Index

Bearish

S&P 500

4-Week Moving Average

Jan

90

Jan

91

Jan

92

Jan

93

Jan

94

Jan

95

Jan

96

Jan

97

Jan

98

Jan

99

Jan

00

Jan

01

Jan

02

Jan

03

Jan

04

Jan

05

Jan

06

Jan

07

Jan

08

Jan

09

4/3/09

Bullish

MTA Educational Foundation University Course – Technical Analysis of the Financial Markets ©2009

Lecture 10 - Sentiment & Supply/Demand20

This lecture series is produced by the Market Technicians Association

Educational Foundationbased on the detailed class notes

of Charles D. Kirkpatrick II, CMT Copyright © 2009.

All rights are reserved.

Options Clearing Corp. (OCC) Index Options Premium Put/Call Ratio vs. NYSE Composite

0.00

0.25

0.50

0.75

1.00

1.25

1.50

1.75

2.00

2.25

2.50

1/13/941/12/951/11/961/9/971/8/981/14/991/13/001/11/011/10/02

1/9/031/8/041/6/051/5/061/4/071/3/0812/25/0812/24/0912/23/1012/22/1112/20/12

Percent

0

200

400

600

800

1000

1200

1400

1600

1800

Index

4-Wk. Moving AverageS&P 500

Bullish

Bearish

Jan

90

Jan

91

Jan

92

Jan

93

Jan

94

Jan

95

Jan

96

Jan

97

Jan

98

Jan

99

Jan

00

Jan

01

Jan

02

Jan

03

Jan

04

Jan

05

Jan

06

Jan

07

Jan

08

Jan

09

4/3/09

MTA Educational Foundation University Course – Technical Analysis of the Financial Markets ©2009

Lecture 10 - Sentiment & Supply/Demand21

This lecture series is produced by the Market Technicians Association

Educational Foundationbased on the detailed class notes

of Charles D. Kirkpatrick II, CMT Copyright © 2009.

All rights are reserved.

Consensus Inc. Bullish Percentage: Equities

0

10

20

30

40

50

60

70

80

90

1/6/04 1/4/05 1/3/06 1/2/07 1/1/0812/30/08 12/29/09 12/28/10 12/27/11 12/25/12

Pecent

0

200

400

600

800

1000

1200

1400

1600

1800

Index

Bearish

S&P 500

Bullish

4-Week Moving Average

Jan

00

Jan

01

Jan

02

Jan

03

Jan

04

Jan

05

Jan

06

Jan

07

Jan

08

Jan

09

4/29/09

MTA Educational Foundation University Course – Technical Analysis of the Financial Markets ©2009

Lecture 10 - Sentiment & Supply/Demand22

This lecture series is produced by the Market Technicians Association

Educational Foundationbased on the detailed class notes

of Charles D. Kirkpatrick II, CMT Copyright © 2009.

All rights are reserved.

Bulls as a % of Bulls + Bears from Investor’s Intelligence

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

2/5/902/4/912/3/922/1/931/31/941/30/951/29/961/27/971/31/021/30/031/29/041/27/051/26/061/25/071/24/081/22/091/21/101/20/111/19/121/17/13

Percent

200

400

600

800

1000

1200

1400

1600

Index

Bearish

Bullish

S&P 500

4-Week Moving Average

Jan

90

Jan

91

Jan

92

Jan

93

Jan

94

Jan

95

Jan

96

Jan

97

Jan

98

Jan

99

Jan

00

Jan

01

Jan

02

Jan

03

Jan

04

Jan

05

Jan

06

Jan

07

Jan

08

Jan

09

4/17/09

MTA Educational Foundation University Course – Technical Analysis of the Financial Markets ©2009

Lecture 10 - Sentiment & Supply/Demand23

This lecture series is produced by the Market Technicians Association

Educational Foundationbased on the detailed class notes

of Charles D. Kirkpatrick II, CMT Copyright © 2009.

All rights are reserved.

Bulls as a % of Bulls + Bears from the American Association of Individual Investors (AAII)

200

400

600

800

1000

1200

1400

1600

1800

01/12/9001/11/9101/10/9201/08/9301/07/9401/06/9501/05/9601/03/9701/05/9801/04/9901/03/0001/01/0101/04/0201/03/0301/02/0412/31/0412/30/0512/29/0612/28/0712/26/08

Index

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

Percent

Jan

90

Jan

91

Jan

92

Jan

93

Jan

94

Jan

95

Jan

96

Jan

97

Jan

98

Jan

99

Jan

00

Jan

01

Jan

02

Jan

03

Jan

04

Jan

05

Jan

06

Jan

07

Jan

08

Jan

09

4/17/09

Bearish

Bullish

4-Week Moving Average

S&P 500

MTA Educational Foundation University Course – Technical Analysis of the Financial Markets ©2009

Lecture 10 - Sentiment & Supply/Demand24

This lecture series is produced by the Market Technicians Association

Educational Foundationbased on the detailed class notes

of Charles D. Kirkpatrick II, CMT Copyright © 2009.

All rights are reserved.

NYSE Total Short Interest vs. Short Interest Ratio

Per

ce

nt

March 09

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

20000

Feb-94 Feb-96 Feb-98 Feb-00 Feb-02 Feb-04 Feb-06 Feb-08 Feb-10 Feb-12

Ratio

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

Total Short Interest

Short Interest Ratio

Jan

90

Jan

92

Jan

94

Jan

96

Jan

98

Jan

00

Jan

02

Jan

04

Jan

06

Jan

08

20

18

16

14

12

10

8

6

4

2

0

Bill

ion

s