Stock Market Update - October 5, 2009

Money flow on the hourly chart for the Dow has already shot back to the top today. I would not be surprised if we see some weakness to sideways movement for the next few trading hours while the money flow cycles back to the bottom. Basically all indicators are overbought except the primary trend indicator (green line with price).

As for the daily charts money flow has reached the bottom of the cycle and looks to be headed back up ... watch out ... these things can tend to bounce along the bottom ... see hourly charts above with the expected move back down to the bottom of the money flow cycle. We have reached a short term bottom on the daily prices relative to money flow. We will just have to see how far this rally will continue. Couple of items that do worry me is the primary indicator for price is at the top of the cycle (green line) and volume has been weak. Today we had an 88% up volume day for the NYSE and cash inflow into the broader market of under $1 billion. We did see selling into strength today for the ETF QQQQ.

One item to note as a strategy ... one could look at the next little peak as an interim top and could look at shorting the market when money flow heads back to the top of the cycle and when it has topped.