Institutional buying was detected on Monday July 2, and Tuesday July 3rd 2012.

One of the things I’ve noticed this week is that the mainstream media groups like CNBC, the Wall Street Journal, and Fox News report the drop in oil as something bad because of manufacturing slowdowns in the U.S. and China; however, institutional trader activity indicates otherwise.

Institutional traders are picking up their buying on the drop in oil prices because a drop in the price of oil is the #1 way to stimulate an economy. In fact, Stephen Leeb wrote a book on the subject and proclaimed, “It’s all about the oil dummy”. He noted that every bull and bear market cycle since the 1940′s has been predicted by the price of oil.

This difference in perception between the public viewing the drop in manufacturing and hence the drop in demand for oil as a negative factor, institutional trader activity suggests they believe just the opposite and are increasing their buying on the drop in oil.

Institutional buying on Monday and Tuesday tracked and timed with news released from financial institutions suggests the reason for buying was:

July 2nd Monday – M&A activity in Tech: Dell buys Quest for $2.4 bln, Micron buys Elpida for $2.5 bln. Manufacturing data showed normal seasonal slow down with index drop to 52.5 in June but still above 50 which indicates expansion. 10 year treasury yields dropped to 1.58% on manufacturing slow down indicating little if any flight to safety. Oil drops $1.21 on manufacturing slowdown in China and U.S. oil drop is stimulus for economy, always leads to major Bull market eventually.

July 3rd Tuesday – Toyota U.S. June sales surge 60% YOY. Surprise jump in May factory orders of 0.7%, economists expected 0.1% increase.

Institutional buying on Monday and Tuesday was primarily concentrated in the following sectors:
#1 = Energy (+2.39%)
#2 = Materials (+1.42%)
#3 = Industrials (+1.05%)
#4 = Technology (+0.8%)

Song: Could Have, Should Have, Would Have
Album: Wall Street – Working On the Edge
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