The Last Part Of The Rally

One of the measures for the overall market that I like to look at is corporate liquidity. Are corporations buying shares (share repurchases, cash takeovers) or selling shares (secondaries, IPOs, insider selling)? Last week saw over $7 billion in secondary offerings and continued insider selling. This Thursday the lockup is expiring on a few billion dollars worth of Facebook stock. At the same time share repurchase announcements and cash takeovers  have been slow in recent months. Corporate liquidity is favoring the bears.

Last week the bears wasted an overbought reading but it was a mild reading. If the bulls manage a rally this week the bears will get a better overbought reading towards the end of this week. Additionally, sentiment seems primed to tip into excess optimism. I don't believe the market has much upside and expect that we will see a turn lower later this week. If we rally in the early part of the week I will consider selling short later this week.

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