Money Flow 102: Non-prerequisite "Money Flow 101".
>>when the price is trending downward, while money is flowing into the
stock, it's a sign that some savvy buyers are accumulating shares.<<
Jerome, it's also a sign that -supply- is increasing. And when supply of anything increases in a free market economy, the price goes down further. Witness any major correction of any stock you want (QWST comes to mind). When price trends down with appreciable volume (really, really, bad combo!!), it's "look-out below" time, savvy buyers and all. Of course the opposite is true. On that note, I once again -humbly- take issue with your next postulation:
>>when the price is increasing, while money is flowing out of the
security, it is a warning of an impending collapse in the stock's price.<<
Back to that supply thing Jerome. We jostled around with this subject a couple months ago so it's pointless to rehash it all over again. Tho, I believe it's worth repeating. <imho> When the supply of anything shrinks (re: QWST), the price goes UP! To interpret these signs as a "warning of an impending collapse" is... well, it's your interpretation.
Still selling QWST PUTs on the dips in case you're interested.
Mathon |
