Jon
Good points about institutional dominance and the lags between public receipts/withdrawals and investment/selling decisions. Fund managers do have some discretion on their cash balances but for the most part seek to hold them at levels required to prevent the need for precipitate selling on the one hand and the fund prospectus investment objectives on the other. (I used to manage broker funds in the 80's - not quite the same thing I know - but the pressure to be fully invested was always present).
My guess is that most fund managers do pay some attention to short term timing (almost as though it was their own money), but that they are hostages to short-term cash-flow, over which - short of the market cheer-leading of their respective marketing departments - they have no control. As you say, it is the actual cash flow that is dominant - for that sector anyway.
What is far less clear is the impact of 1. Vastly increased leveraged involvement in the markets by hedge funds (over the past 10 years or so - where cash can be king and managers have near absolute discretion) and 2. The activities of the large non-fund manager institutions that operate on their own account.
At the end of the day we're operating in a vastly complex global market in equities, but one in which the real pros will ensure that amatueurs get badly burned and are unlikely ever to take more money from the markets than they do.
A couple of points about the present position
For 2 days running futures have closed almost spot on the actual market close with just a we bit of fluctuation either side between 4:30 and 5:30 (pretty much lock step with the US as usual I guess) - nervous, hesitant, looking for direction ??
But - take a look at today's volume - lower than yesterday but 2nd highest of the move up to date.
If it had been 20% or so higher it would have clinched it for me. As it is - I still reckon we're on the cusp of a turn but could just possibly see another attempt at 4570+ first.
Watching the US like a hawk!
