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Capitulation

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Quote:

"Traditionally, the word capitulation describes a surrender between fighting armies. So what is capitulation when it's used on Wall Street? What does it signify? We explain.

What is capitulation?

In simple terms, capitulation is when investors try to get out of the stock market as quickly as possible and look for less risky investments. It's also described as panic selling. It's usually based on investor fears that stock prices will fall further than they have.

Capitulation is usually signaled by a decline in the markets of at least 10% in one day.

In getting out of the market, investors give up any previous gains in stock price. That means they take a financial loss, just to get out of stocks. The thinking is: take a smaller loss now rather than a bigger one later.

Real capitulation involves extremely high volume—or high numbers of traded shares—and sharp declines in stock prices.
Source: cnbc.com/id/44022035

CNBC explains what "Stockmarket Capitulation" means. This is well known on the ---> downside.

This are todays numbers from IG Markets from today. Almost "everyone" is betting on lower stockmarket prices:

DAX short 76%
Dow short 79%
SPX short 79%

Gold long 87%
Source: ig.com/ch/ig-indizes/deutschland-30

This numbers we could see now for month (!).

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Let´s go back to CNBC and let´s understand, how "capitulation" on the downside works:

Quote: "Suppose a stock starts dropping in price. There are two choices. Investors stick it out and hope the stock begins to appreciate—or they can take the loss by selling the stock.

If the majority of investors decide to wait it out, then the stock price will probably remain stable. But if the majority of investors decide to capitulate and give up on a stock, they start selling and that starts a sharp decline in a stock's price."

This is how i see capitulation works in an uptrend, wich you can call "The Most Hated Rally Ever";

Capitulation is well know in a down trend on the downside. But for me it looks like that Investor Behavior might be same if stocks go higher an almost everyone missed to buy low. In Europe even Retail Investors and Professional Investors still do no believe in this rallye. If ever the DAX cross the 11,5 k than people are forced (!) to change their mind. The overwhelming majority of all investors are "not buying" this rally.

Now it is only the matter of a very few points only the DAX needs to go higher to change everybody´s mind.

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If you check all trading idea you can see that i follow this up trend from this second when it starts. Until now even i make some comments on the largest website for Retail Investors in Germany there is no one who agree with this. Maybe there are a few out ther predicting a higher DAX medium or long term.

Believe it or not and try to use goolge: You will not find anyone who is predicting that the DAX is able to close in at his ATH ---> soon.

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Record Inflows in ETF´s will global fuel any rally in major stockmarket Indexes

Quote:

ETFs globally gather record cash in 2016 -BlackRock
Economy58 minutes ago (Jan 03, 2017 05:00PM ET)
By Trevor Hunnicutt

NEW YORK (Reuters) - Investors funneled $375 billion into exchange-traded funds in 2016, investment manager BlackRock Inc (NYSE:BLK) said on Tuesday, a global record that came as investors looked to cut costs.

The total, which is preliminary, compares with $348 billion in 2015 and includes a record $286 billion haul in the United States, home to the funds' biggest market.
ETFs are a basket of stocks or other assets traded by individual investors and institutions. Fund managers from BlackRock to Vanguard and Schwab offer index ETFs that try to track, not beat, the market. They have sliced management fees on some funds to as little as $3 annually for every $10,000 managed. All three companies announced price cuts last year.
Those low fees along with other cost savings and conveniences have helped the more than $3 trillion ETF business take assets from rival financial products, including actively managed funds that attempt to beat the market but may fall short of that goal.
U.S.-based active stock funds recorded $288 billion in withdrawals in 2016, the largest on record, according to preliminary Thomson Reuters Lipper data through November.
ETF issuers were also able to draw investors into "smart beta" products that often attempt to beat the markets but do so based on a set of rules governing how they invest, rather than a portfolio manager making those calls. The products can be pricier for investors than traditional index funds while still undercutting active managers.

"The fact that we're at new-record inflows with such a slow start is a pretty strong reversal," said David Perlman, an ETF researcher at UBS.

Markets started 2016 in bad shape, after the U.S. Federal Reserve raised rates and as oil prices cratered. Stocks managed to rebound from a February low, but events including the U.S. presidential race and the British vote to exit the European Union kept investors skittish.

Money moved to the perceived safety of the fixed-income market, and BlackRock's early data showed bond ETFs taking in a record $115 billion in 2016.

BlackRock, with $1.3 trillion in global ETF assets, is the largest provider of such funds. Its iShares ETF brand attracted $140 billion globally during the year, BlackRock said, describing that figure as a record.
In the U.S., BlackRock attracted $105 billion into ETFs during the year, followed by Vanguard's $94 billion, State Street's $52 billion and Schwab's $16 billion, according to separate estimates by FactSet Research Systems Inc.

Source: investing.com/news/economy-news/etfs-globally-gather-record-cash-in-2016--blackrock-450930

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