Saturday, April 18, 2009

Stock Market Update - April 17, 2009



The market sent mixed signals on Friday. All three major index's were up only marginally and there was an outflow of $51 million on SPY and an outflow of money on QQQQ (outflow of $44 million). One would say ... "the market is about to implode" or one would think until you looked at the entire market. On Friday the Total U.S. Stock Market had a net inflow of $6.3 billion ... I have to admit ... I'm even scratching my head on this one. The outflows could mean big money is leaving the index investing and is actually placing bets on individual stocks they believe are bargains/undervalued. Or it could mean the retail investor is buying the market while the commercial money is selling its positions and easing out the back door. Only time will tell who is actually doing all the buying ... if it is the commercials then we may spike up here in prices very quickly ... if it is the retail investor buying ... then we will roll over and head back down 50 or 100 points on the S&P 500. Note at the top chart on the Dow ... the blue line on the price chart is a modified cash flow ... it is moving back up ... this points that money currently moving into the market. I must point out this can stop at anytime. Note all money flow is from The Wall Street Journal.


The NYSE net advancing and declining issues shows a topping action in the net advancing issues in the current rally (note the green line - its the FRYE indicator). But wait a minute ... if you look back last spring the green line started down but the market continue to move up ... for a while until the tick volume started to move down and then price also followed (the tick measurement is the black line). Basically what I'm trying to point out is that some of these indicators can start to move down and the market can still move up until all buyers are exhausted.
Last I wanted to point out the volatility index. This continues to move down and if this continues then the market should maintain or move up in price. Again the green line is the Frye indicator and it measures the strength of the Volatility index.

What I want to point out is that the market may go higher in the short term and then it might not. All we need to do is continue to watch the price action and follow the indicators and money flow ... they will give us the answer to the general near term direction of the market. Use your stops wisely.

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