Foreign Money Headed to the U.S.?

Mark Hulbert points to a Dennis Slothower hotline message from a week ago as something that might be stoking our domestic stock market. Click here to read the Hulbert piece from cbsmarketwatch. Here's the text of the main points:

In his hotline Friday night, he pointed out that the China Banking Regulatory Commission, in an attempt to cool its overheated stock market, had ruled that Chinese banks "can now invest as much as 50 percent of funds in overseas stock markets."
Slothower calculates that this means that "up to $2.3 trillion in China monies ... can now move out of China."

To put a sum like that in perspective, consider that the total value of all publicly traded stocks in this country is around $15.1 trillion, according to Wilshire Associates. If even a modest fraction of the $2.3 trillion makes its way into U.S. stocks, we could see a "further parabolic advance in equities," as Slothower puts it.

Our intelligence suggests that any tidal wave of money from outside investors will find its way into blue chips, S&P 500 and DJIA type names. We don't think it's natural to assume the Russell 2000 type companies would garner much of the flow from abroad. What this all means, is that the bull market may have room to run! As Slothower says: a "parabolic" advance could be forthcoming! Good luck.