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

To: Challo Jeregy who wrote (2945)	5/3/2002 12:02:34 PM
From: GraceZ	Respond to of 6346

I haven't looked at the aggregate numbers today, but in the last nine months or so the daily money flow has strongly diverged from price. In other words, on rallies the flow has been out and on declines it has been strongly in, but over time it is strongly in on the Naz and the DOW, the biggest divergence is the history of the markets. Although, if you look at individual issues you see some large issues like AOL and GE where the flow has been negative for months and months, with the price following that flow. Others it is strongly in, like CSCO, BRCM and EBAY even while price explores the downside. Money flow almost always follows the block flow, whereas price almost always follows the small order flow. This is how you can get such a divergence. Block buying with small lot selling gives you a declining price with positive money flow. What happens though is that block buying (institutional buying) slowly locks up shares and reduces the available float. A stock where the flow has been strong for months and months only needs a slight change in marginal demand to change direction. The same with a stock where the money flow has been negative for months and months. GE was negative for a long time before it showed up significantly in price. It took the bond offering fiasco along with Bill Gross's campaign to really get it going down.