Feb 3, 2005

The January Effect

Now that January is over it seems some investors are stepping up to the plate.

Investors poured an estimated $3.6 billion into U.S. and international stock mutual-funds in the week through Feb. 2, the fastest pace since mid-December, data provider TrimTabs Investment Research reported Thursday.

U.S. stock funds realized net inflows of $2.8 billion, compared to outflows of $747 million the prior week.

Meanwhile, investors sent $872 million to international equity funds, following additions of $1.5 billion a week earlier.

Bond funds saw inflows of $653 million, reversing outflows of $302 million the prior week, while hybrid funds -- which buy stocks and bonds -- had inflows of $661 million vs. inflows of $562 million the week before.

Separately, TrimTabs reported that about $500 million was pulled from Exchange Traded Funds that track U.S. stock indexes during the week, compared to an inflow of $2.2 billion the prior week.

Typically the strong period goes to mid-March. If the markets continue higher I would be looking for signs of distribution. The pullback that started in January had some teeth to it so I don't think the market can hop back off to the races without doing some work below the Dec highs.

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