Thursday, March 21, 2013

Money Flow Vs. S&P 500


As we have been documenting over the past few days, the markets' retracements up, first following the gap down Sunday night, and second, Wednesday, were short covering. Short covering always weakens the internals of a market. Having a visual of the money flow this week just confirms our analysis, but nonetheless it is nice to be reassured. The accuracy of this proprietary indicator speaks for itself. There is no doubt the smart money was distributing all week, taking profits, and even getting short. It is possible that we coil here longer and let the volatility pressure build. Ultimately, a strong move is going to follow regardless of how long it is postponed. Also, Watch out for bear traps: we've had at least two this week, already.