It is courtesy day, so we will share one of our (daily) paid subscriber charts with you.
Which chart is it?
It is our chart on daily Inflowing or Outflowing Liquidity levels.
Jesse Livermore back in the 1930′s said it most poignantly: “The secret to the market is about money. If money flows in the market goes up, if money flows out the market goes down.”
Of course, there is always money flowing in, and money flowing out at the same time. So the real number to track is the “net” amount of money which is what Livermore was really referring to.
With that said, we will discuss the Long Term Liquidity Flows chart seen below. First, notice that there are four Quadrants. The upper two are where the money flows are at expansion levels because the “net” amounts are positive. The lower two quadrants are where the money flows are at contraction levels because the “net” amounts are negative.
What else is there to know?
It also matters what direction the Liquidity levels are trending in.
So, let’s look at today’s chart …
Where is the Inflowing Liquidity? At the close yesterday, the Inflowing Liquidity had been in Contraction territory since May 16th. On May 11th, it made its first lower/low, so it started to down trend. The next day the market gapped down.
And where was the Inflowing Liquidity yesterday?
In spite of the market moving up, the net Inflowing Liquidity went a little lower in Contraction territory. Unless Inflowing Liquidity turns around and starts to trend back up, the market will have more downside in its future. (FYI: This chart will not be shown again on this free site until sometime in June.)
*** Please 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.