Important, because it is a chart that show’s the daily levels of Inflowing Liquidity.   This market has been confusing many because they are finding that traditional indicators aren’t working like they used to.   The reason is the amount and timing of Inflowing Liquidity coming into the market.

As you can see on today’s chart, Inflowing Liquidity levels took a dip yesterday and could test the Primary support line in the next few days.

However, if it does, one should take into consideration that Inflowing Liquidity is still in upper Quadrant OneExpansion territory.   A market problem will only start to develop when the Inflowing Liquidity makes alower/low and starts to down trend into Contraction territory.   It is a good reason to look at data like this first each day … even before looking at other charts, because they will end up reacting to what is happening relative to money movements in the market.

]]> http://www.stocktiming.net/inflowing-liquidity-2/feed/ 0 http://www.stocktiming.net/stock-market-liquidity-trend/ http://www.stocktiming.net/stock-market-liquidity-trend/#comments Fri, 03 May 2013 15:55:23 +0000 Marty Chenard http://www.stocktiming.net/?p=1030 Today’s chart show’s one of the most important aspects of the stock market right now.

I have spoken on this topic before, but allow me to go a little more in depth at this time.   The topic and issue is about the amounts and levels of “Inflowing Liquidity” or how those with the cash can be in control.

You have all heard the old saying that “cash is king” …

There was a very good reason for this saying … From one perspective, it refers to the value of holding cash and waiting for an opportunity that has a large return-leverage.

For example … On occasion, some really good “below market value” deals appear due to the stress an original owner is under.   On these occasions, the original owner often tries to liquidate something of value at a “bargain basement price” in an effort to generate cash quickly.   It is at times like this, that Warren Buffett often comes in and picks up a good future bargain.

If cash is king, then one could say that the amount of Inflowing or Outflowing Liquidity is a reflection of the use of that cash.  The value of knowing the trend and relative amount of Liquidity in the stock market is one of the most important aspects of the stock market today.

Let’s take this one step further … For the sake of simplicity, let us say that Liquidity can be in a state of Expansion or Contraction.  “How it gets there” is through trending action where a series of successes or failures establish an up or down trend.

*** An up trend of Inflowing Liquidity, that takes it to high Expansion territory tells you something.   It tells you that some source has repeated injected large amounts of money in successful attempts to get something at a bargain price or drive prices higher.    When this is occurring, the market moves higher no matter what your indicators, or negative divergences might be telling you … because “cash is king” and negative divergencesnever kick in until after Inflowing Liquidity recedes and starts to down trend.   Until then, negative divergences will just grow larger and confuse you.

At the other end of the spectrum, a down trend of Inflowing Liquidity, that takes Liquidity to low  Contraction territory that tells you something as well.   It tells you that some source has repeatedly removed large amounts of money in successful attempts in order to save profits or mitigate perceived or real risks.

The point is that investors like Jesse Livermore were right:  “The stock market works on a simple principle … when money flows IN, the market goes UP.   When money flows OUT, the market goes DOWN.”

This is why keeping a daily track and accounting of Inflowing Liquidity is so important.   The market today is about what is happening to the levels and trending of Inflowing Liquidity.   It is also the reason why so many investors have been confused by today’s market.

Today will be “free member courtesy day”.   That means we share one of the charts that we post every day for our www.StockTiming.com Standard subscribers.   The chart we have chosen today is obviously … one about Inflowing Liquidity levels and its trending.

I won’t offer a big explanation, because this is one of those charts that you either get or you don’t.   Basically, this chart show’s the trending and relative amounts of Inflowing Liquidity in the stock market relative the NYA (New York Stock Exchange) Index.

On the chart, you can see how Inflowing Liquidity was up trending and starting to enter Liquidity Expansion territory in June to August of 2012.   It has remained in Liquidity Expansion territory since hat time, is has been in the upper Quadrant of Liquidity Expansion during all of 2013 so far.   What should you make of this?   One answer could be: If cash is king, follow the king.

Since then, we have had a lot of requests to “see” a chart showing the daily Accumulation/Distribution levels for Institutional Investors.   Fair enough … below is the chart as of yesterday:

As you can see on the chart, the trend lines had converged last Friday with another large down tick yesterday.   (Yesterday, the VIX was conflicting with a tick that was way above its Bollinger band.  The significance of that, is that the pattern has occurred twice since last December with a turn around up move on the NYA Index the next day.   The previous two patterns had a gap-down move at the open on the VIX the next day.   This morning also had a gap-down move on the VIX at the open.)

Note: For it to be a healthy tick today, the daily VIX tick should have this kind of look:      This is a tick where the close on the VIX is clearly lower than the open.

One thing that I want to point out on today’s chart below, are the two blue trend lines from December to April that we drew on the NYA Index and the Institutional Accumulation/Distribution part of the chart.

If you notice, the NYA trend line has been moving up, while the Institutional Accumulation/Distribution trend line has been going since December.

What does this mean?   It means that most of the money flowing into the market has not been coming from Institutional Investors.   In fact, Institutional Investors have been Accumulating less and less as the market has been moving higher and higher.   This also suggests that Institutional Investors have been profit taking as time moves on, and at some point they will over-burden the market with their selling.  (FYI … this chart can be found as a daily update in Section 4 as chart 7 on the Standard subscriber site.)

*** Click on the link below if you would like to email a page link of today’s update to a friend or colleague.

The Question is: What is the most Important key to the Stock Market?

The answer is: ”The Net amount of Inflowing Liquidity”. 

Background:  What is “Inflowing Liquidity” and what is the definition of “Net Amount”?
Inflowing Liquidity is the amount of money flowing into or out of the Stock Market on a daily basis.  The “Net Amount” is the remaining amount after the selling activity for each day.   If the Net Amount is positive, then the market had an excess of inflowing money even after all the selling.  If the Net Amount is negative, then there was not enough to cover all the selling that day.

We quantify four levels of Inflowing Liquidity.  Two levels (Quadrants 1 and 2) are in Expansion Territory, and two levels are (Quadrants 3 and 4) are in Contraction Territory.

Here are the 4 possible conditions for Inflowing Liquidity:

1.  In Expansion Territory with Inflowing Liquidity in an up trend. (This is exhibited as increasing Net Liquidity levels on a daily basis which represents a net increase in daily Buying.)   This is a market-up condition.

2.  In Expansion Territory with Inflowing Liquidity in a down trend.  (This is exhibited as decreasing Net Liquidity levels on a daily basis which represents a net increase in Selling.)   This is a time of profit taking, consolidation, or a pull back in the market … it could develop into an Inflowing Liquidity down trend that leads to a correction.

3.  In Contraction Territory with Inflowing Liquidity in a down trend.   (This is where increasing amounts of Selling occurs, and where the daily amounts of Inflowing Liquidity decrease more and more as time goes on.   It is also where the VIX rises, and panic Selling happens.    This is a market-down condition.

4.  In Contraction Territory with Inflowing Liquidity in an up trend. (This is Increased Buying while there is still a net daily out-flow of money.  Here is where early buying starts to occur even while the market is still correcting.   It is only after the Inflowing Liquidity rises to a higher Quadrant level, and where a Liquidity resistance line is broken to the upside, where enough new Buying is occurring for a reversal back to an up trend to be established.)

-  Credit has to be given to Jesse Livermore, a trader during the early 1900′s.   His main tenet was simple: “Markets go up when money flows in, and Markets go down when money flows out.”    From his trading profits, he bought a series of fully staffed mansions around the world, a fleet of limousines, and a yacht.

An important FYI:  Inflowing and Outflowing Liquidity is more important today than it was just a few years ago.  Why?   Because even experienced technicians are being tricked by the negative divergences that they see.   They used to work like magic in the old days, BUT now, negative Divergences do NOT kick in until afterInflowing Liquidity starts to down trend.   The Liquidity down trending is a key, because as long as the market sees net positive Inflowing Liquidity coming in, negative divergences cannot result in a market down move.

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Where can one find this kind of information?  

Due to the importance of this information, we post the data in these chart Sections for our www.StockTiming.com subscribers each day:   The charts showing the daily Inflowing Liquidity amounts and trending can be found in Section 4 as Charts 8-1 and 8-2.

Question #1:  Is there a group of investors that “control the direction” of the stock market?

The answer is yes, and they are a group that own over half of all the stocks.   They are not HFTs (High Frequency Traders), and they hold the stocks for appreciation for their underlying customer base.

Who are they?   They are classified as “Institutional Investors”.  Due to the clout they have in the market, you always want to be trading in the same direction they are trading in and never against them.

How do you know what direction Institutional Traders are trading in?   
They are only 4 different possibilities they can exhibit and they are:

1.  In Accumulation with Accumulation in an up trend. (Increasing Accumulation and Buying … this is when you want to be buying.)

2.  In Accumulation with Accumulation in a down trend.  (Decreasing Accumulation and/or profit taking … since Institutional Investors are decreasing their exposure, it would be good to do the same.)

3.  In Distribution with Distribution in a down trend. (Increased Selling while aggressively decreasing exposure in holdings … here is where you want to move to cash (or possibly go short if the market is in a down trend).

4.  In Distribution with Distribution in an up trend. (Selling, but decreasing the rate of selling which could shift to Accumulation if the trend continues … here is where you want to get your shopping list together and be ready to buy if the trending is getting close to Accumulation.)

Where can one find this kind of information?  

Obviously, this is very  important information, which is why we post the data in these chart Sections for our subscribers each day:
> The chart showing daily Institutional Buying and Selling amounts can be found in Section 4 as Chart number 6. (This chart show’s the individual daily levels of Institutional Buying and Selling amounts.)
> The chart showing the daily Institutional “Net” of Buying and Selling can be found in Section 4 as Chart number 7.  (This chart answers whether Institutional Investors are in Accumulation or Distribution, and what the direction of the trending is.)

What is the second most Important Question that investors should be asking?

This question will be identified and answered on Monday, so please come back and join us then when we will:
> Discuss why it is a very important key to today’s market, and …
> Discuss why those nasty negative divergences “never kick in” until after this indicator starts to down trend or go into Contraction.
So, please join us on Monday when we have this important discussion. http://www.stocktiming.com/Stock-Market-Daily-Analysis.htm

We have been posting the Institutional Investor Accumulation/Distribution chart (from our Standard subscriber site) on this free member site for the past two weeks.   We will post it again today, but then refrain in posting it for a while in fairness to our paid subscribers.

Here is what the Institutional Investors are doing right now …

They are still in Accumulation, but if you look at the chart, it is in a down trend which signifies that they are currently lessening their exposure to the market.

Do note that I drew trend lines from December to yesterday on the NYA Index and the Institutional Accumulation levels.

What do you notice about the two trend lines?

The answer is that while the NYA Index’s trend line is moving higher over time, the Institutional Accumulation levels were trending lower which means that the higher the market goes, they participate in the move but with less exposure on each subsequent move up.

Note:  The interesting thing about this chart is that investors could just mimic what Institutional Investors are doing and use it as a trading system.   (This chart is posted everyday on the Standard subscriber site in Section 4, as Chart number 7.)

]]> http://www.stocktiming.net/institutional-investors-chart/feed/ 0 http://www.stocktiming.net/institutional-investor-accumulation/ http://www.stocktiming.net/institutional-investor-accumulation/#comments Mon, 18 Mar 2013 13:59:53 +0000 Marty Chenard http://www.stocktiming.net/?p=1012 Today will be a Free Member “courtesy day” where we share one of our 3 dozen plus charts posted daily.  Today’s choice is the level and trending of Accumulation and Distribution by Institutional Investors.
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Institutional Investor Accumulation/Distribution Levels …

Below are the Institutional Investor levels and trending for Accumulation/Distribution since last November.

The chart show’s short term good news and medium term bad news.   How so?

Well, if you look at the chart, you can see that Institutional Investors are in Accumulation and that it has been trending higher on a daily basis … and that is good for the short term.

Now look at the two trend lines we drew from last November to last Friday.   The trend line for the NYA Index is going up … but when you look at the trend line for the Institutional Investor Accumulation levels, you can see that it is going down.

What does that mean?

It means that as the rally matures, Institutions have been cutting back their exposure to the market.   The two different directions in the trend lines is also saying that there is a negative divergence between the actions of the market and Institutional investors.

If you have the feeling that Institutional Investors are not the “big guns” anymore and that they really don’t impact the market, then take a minute to observe what happened to the market every time the Institutional trending shifted down on this chart.

What’s the message from the chart? 

Be ready for when the Institutional Accumulation/Distribution trend lines shift down because they will have a greater downside impact on the market the next time.

]]> http://www.stocktiming.net/institutional-investor-accumulation/feed/ 0 http://www.stocktiming.net/institutional-investors-accumulation/ http://www.stocktiming.net/institutional-investors-accumulation/#comments Thu, 14 Mar 2013 02:09:40 +0000 Marty Chenard http://www.stocktiming.net/?p=1007 Are Institutional Investors in Accumulation or Distribution?

The simple answer is that the are in still Accumulation.

However … at the same time, their level of Accumulation is lower than the start of the market’s rise that began last November.  See today’s chart below which show’s the NYA Index versus the Institutional Accumulation levels.

This says that Institutional Investors are not in agreement with the market since they are showing a decrease in Accumulation.

In regard to the most asked question by investors last week … “Is this chart on Institutional Net Buying and Selling posted every day?”

The answer is “yes” … we post it everyday on the www.StockTiming.com Standard subscriber site.  (Reference: Section 4, Chart 7.)

The chart show’s short term good news and medium term bad news.   How so?

Well, if you look at the chart, you can see that Institutional Investors are in Accumulation and that it is trending higher on a daily basis … and that is good for the short term.

Now look at the two trend lines we drew from last November to yesterday.   The trend line for the NYA Index is going up … but when you look at the trend line for the Institutional Investor Accumulation levels, you can see that it is lower and going down.

What does that mean?

It means that as the rally matures, Institutions have been cutting back their exposure to the market.   The two different directions in the trend lines is also saying that there is a negative divergence between the actions of the market and the buying by Institutional investors now.

If you have the feeling that Institutional Investors are not the “big guns” anymore and that they really don’t impact the market, then take a minute to observe what happened to the market every time the Institutional trending shifted down.

What’s the message from the chart? 

Be ready for when the Institutional Accumulation/Distribution trend lines shift down because they will have a greater downside impact on the market the next time.

*** Click on the link below this chart if you would like to send a page link of today’s update to a friend or colleague.

We continued … Conditions are now likely to be more erratic and volatile.   This is a good time for you to ask yourself: ”Is the upside potential worth the downside risk?”   The possibility is increasing for two downside days to erase two weeks of upside movement.  That is action that is too fast for many, so choose your battles carefully.

So, what happened in the past two days?

The chart below show’s how many days of each index were erased by the past two days of downside movement:

At the same time there was one S&P Sector that experienced NO down days at all.

What was it?

It was the Consumer Staples Sector (XLP ETF).   (FYI … StockTiming.com subscribers can log on to see what the 10 top stocks in this sector were.)