Some of our investors periodically ask us, “how are the money flows?” They know we keep track of this metric. The measurement is actually an indirect one and more accurately tracks buying or selling pressure on individual stocks. When a preponderance of stocks in a sector or in the market at large are reflecting buying pressure, we say money flows are positive for that category.

Tracking actual money flows into the market is virtually impossible. There are so many sources. Flows may come through dark pools, which are designed to keep sources and participants private. Companies may be buying back stock or have dividend purchase plans, among others. Some stocks trade on foreign exchanges as well as our domestic ones. There are many ways to disguise buying or at least not be so visible. Selling is harder to hide; when stocks go down there is selling.

What can’t be camouflaged is individual stock behavior. If a stock consistently closes at a higher price than its daily average, then it is showing buying pressure.

When most stocks are showing the same, then money is coming in and pressuring for higher prices.

Higher prices may occur immediately or have delayed reactions once individual supply at any price level is absorbed. The Lonely Bull has stated that we are seeing positive money flows. What he is more precisely saying is that most stocks are showing positive buying pressure. The Bull is still seeing this, and it has grown even stronger; stay steady my friends.

The Lonely Bull