Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Stock Market Rallies Determined by Liquidity Inflows and Outflows

Stock-Markets / US Stock Markets Feb 14, 2008 - 08:58 AM GMT

By: Marty_Chenard

Stock-Markets

Best Financial Markets Analysis ArticleIf you think of logically ... when money flows into the market, stocks are being bought.  When the amount of Inflowing Liquidity is in Expansion , then more and more investors are entering the market ... and that drives prices up.

However, when Liquidity is out-flowing, it is a condition where investors are removing their capital from the market.  That means the impetus is on selling, and the market pulls back.  When out-flowing Liquidity deteriorates to the point where the net liquidity is in Contraction, then the market experiences a correction.


Liquidity levels and its directional momentum are a key factor relative to market trending.  You cannot have the market in a rally mode when Liquidity is leaving the market ... and, you cannot have the market in a correction when Liquidity is entering the market and at an Expansion level.

What does a historical Liquidity chart tell us about the market during the past 2 years?

Today's chart goes back to April of 2006.  On the top graph, you can see the change in Liquidity levels during that time period relative to the New York Stock Exchange.

Notice what happened to Liquidity levels since October of last year.  

Inflowing Liquidity peaked in early October.   Pay attention to each peak AFTER October's peak. What do you noticed that happened to those peaks?

Answer:  They all made lower tops.  Lower tops and lower bottoms is essentially the definition of a down trend.  With Inflowing Liquidity in a down trend, the market indexes had to follow the same direction.

When was the most recent time that Inflowing Liquidity went so low that it was in Contraction?

If you look at the chart, you can see that Liquidity went into Contraction at the very beginning of January.  With Liquidity in Contraction, the market had its most serious drop of the past two years.

So, what is happening to Liquidity levels now? 

Currently, Liquidity is still in Contraction and in a down trend.  We just had a recent lower top that is now moving down again.  The critical thing to watch now is what happens ... will Liquidity make a lower bottom, or will it hold here and move up and make a higher top?  If the latter doesn't happen, then this correction will continue until Liquidity inflows increase and move into Expansion territory.

(This chart is posted every day on our paid subscriber sites.)


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.

Marty Chenard Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in