Liquidity inflows and outflows are easily understood by any corporation. When their cash inflows are positive and increasing, they have money to expand and hire. When their cash is outflowing and negative, their businesses contract and they layoff workers.

The stock market is not any different. If you measured the amount of liquidity flowing into, or exiting the market you would see that these money flows correlate to market rallies and market corrections .

When Liquidity flowing into the market reaches expansion territory, stock values rise and the market rallies up.

However, when Liquidity moves into Contraction, stock values sink and the market goes into a correction.

As you will see on the chart below, that is what happened on May 22nd. The rising stock market liquidity inflows broke its support line to the downside. That signaled a break down on increasing liquidity. Liquidity inflows continued to deteriorate, and then on June 9th. Liquidity levels fell into Contraction ... a condition associated with all corrections.

Many investors are tempted to buy now, thinking that a market bottom is here. The fact is, that such an event does not occur until liquidity inflows stop accelerating down and begin a reversal to the upside . As of yesterday, liquidity inflows were still in Contraction territory and still in a down trend.

Do you find this kind of data useful? If so, you can see it posted on a daily basis, by becoming one of our paid subscribers. This kind of data is just one of many analyses that we do which has kept a lot of investors out of trouble.

By Marty Chenard
http://www.stocktiming.com/

Please Note: We do not issue Buy or Sell timing recommendations on these Free daily update pages . I hope you understand, that in fairness, our Buy/Sell recommendations and advanced market Models are only available to our paid subscribers on a password required basis. Membership information

Marty Chenard is the Author and Teacher of two Seminar Courses on "Advanced Technical Analysis Investing", Mr. Chenard has been investing for over 30 years. In 2001 when the NASDAQ dropped 24.5%, his personal investment performance for the year was a gain of 57.428%. He is an Advanced Stock Market Technical Analyst that has developed his own proprietary analytical tools. As a result, he was out of the market two weeks before the 1987 Crash in the most recent Bear Market he faxed his Members in March 2000 telling them all to SELL. He is an advanced technical analyst and not an investment advisor, nor a securities broker.

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