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Strategies & Market Trends : Groundhog Day -- Ignore unavailable to you. Want to Upgrade?

To: Challo Jeregy who wrote (2434)	4/27/2002 7:00:15 PM
From: GraceZ	Respond to of 6346

what happens when money comes out of small caps? They aren't as easy to distribute . . Oddly enough distribution can occur with a rising or a dropping stock price. The Naz peaked and started having negative money flow in 1998, almost a couple years before price peaked. Likewise the Naz has been positive money flow for the last 10 months while price is still declining. While money flow tends to follow big blocks, price tends to follow small orders. It does this for lots of different reasons, but mostly because the 100 share orders represent a larger number of transactions and each time you have a transaction there's another opportunity for a tick change. Its the ticks that change price. While a big block might go off above or below the best ask/bid the price usually reverts to its previous state. At any rate its entirely possible for distribution to occur on the small to mid caps while price continues to rise. You have to remember that the public tends to buy what has already gone up, they are risk averse. They will pay a premium for something that worked out well in the past and what they never seem to learn is that in doing so they effectively reduce their return to zero or less than zero. What they need to do is engage risk, buy the growth stock before it is apparent to everyone that it is a growth stock, buy a turnaround before it becomes apparent it is a turnaround, buy a sector when it looks the worst and is selling for book value.