Sometimes, something is worth repeating ...

tenteddies

Sometimes, something is worth repeating ... like this questions from investors:  

"Why is it that "negative divergences" aren't triggering, which is rendering
various investing models powerless as the market runs over them?"

For years, analyst and market traders have been carefully watching for divergences as a clue to when a trend reversal was going to occur.  Many professional investors base their buy/sell strategies on negative and positive divergences.  From a technical perspective, many investors used to anticipate break-downs in market support structures when negative divergences started to appear.

To the dismay of these investors, there have been a plethora of negative divergences during the past month ... but, they have just been sitting there dormant ... as the market continued up.

We discussed this topic last week, and it is important enough to readdress it today.  

So, what is going on?
The answer is that there is another force in the market that has been overpowering negative divergences.  In fact, negative divergences have no power until after this force starts to contract.

What is it?
It is the "net amount of inflowing Liquidity" coming into the market every day.   "Net amount of Liquidity" is the amount of Liquidity coming in or leaving the market after all the selling has been absorbed ... or not absorbed.

Since September, the net inflowing Liquidity has been in Expansion territory and in an up trend.   Inflowing Liquidity is the unseen force in the market that confounds many, and subverts the power of negative divergences as well as many commonly used technical indicators.

It isn't until Liquidity levels pull back in the face of lingering negative divergences, that a market pull back or correction finally occurs.  When inflowing Liquidity is in Expansion territory and at a high rate of expansion, the market continues to move up in spite of any negative divergences.  

hillcrest

Thanks for sharing!

ahdou

great point!

tonyshen

jdad4

回复 1# tenteddies


    thanks! that explain alot of things why these TA indicators not working well.

navybean

Thanks

revolver

greenback

Anyone knows where the liquid flow plot data come from? I would like to see the updated data every week.

ranchgirl

Where is the money coming from? FED??

小财虫

trade28

thx

sooners

回复 1# tenteddies


    thanks

开小差

thx, ding

whzdf

catbear

Where is the money coming from? FED??
ranchgirl 发表于 2010-12-17 22:54

    星星的帖子提过两三次钱的来历。

catbear

好贴了。

老姜一年多前在胡同就贴过类似的内容：如果TA不工作了，就要看看是否有大资金流入流出股市。

星星前几天也说了好几次，资金从近期开始变成净流入了。