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A Terrible January

Dow Industrials down 9.0 percent*

Dow Transports down 16.3 percent*

S&P 500 down 8.8 percent*

Nasdaq Composite down 6.5 percent

Russell 2000 down 11.3 percent*

*Worst January Ever*

Get me out of January! The stats are just ugly: simply put, this is the worst January ever for several of the indices.

What's the problem? Forget about the economy or earnings; stock traders are looking for bottoms, and to do that, you want to follow the money.

Let's look at the money in January:

1) Stock buybacks are down 90% (Altria and MMM announced yesterday they were eliminating their buyback)

2) Insider buying is at a multiyear low

3) New stock offerings are at multimonth lows

4) Mutual fund inflows are up, in fact January will see the first montly inflow in 8 months

What does all this mean? It means that the smartest people—the companies themselves and the insiders, are not buying stock even though they are dirt cheap by historic standards.

It means that while there certainly are companies that are eager to sell stock, there are not sufficient buyers.

Wait!

What about all the buyers of mutual funds? Sorry: it is not a good sign that professionals are avoiding the markets, but retail buyers are buying just because prices are down.

We need to see these stats improve before stock traders will talk about a real bottom.

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