Monday, April 16, 2007

Going With The Money Flow

The more I dig into research regarding dollar volume flows in and out of stocks, the more impressed I am by what I find. I recently mentioned the fly in the bearish ointment: the fact that money flows have been above average for the Dow 30 industrial stocks for 14 of the prior 20 sessions. As noted in today's Weblog perspective, when flows have been strong over the past 20 days in the Dow stocks, the odds of a rising Dow over the next 20 sessions have been quite good. This morning's rally has been consistent with that leaning.

Recall also my post picking an individual stock with superior dollar volume flow characteristics: HCR. That issue is currently trading quite a bit higher on talk of a takeover. It appears that the spikes in money flow did indeed represent footprints from savvy institutional investors.

I will be presenting far more research related to dollar volume flows, both for the broad market and for individual sectors and stocks. In the interim, check out these links, kindly brought to my attention by an alert reader. Here we have Wall St. Journal data on falling stocks with positive money flows; rising stocks on negative flows; and sector flows. These are updated hourly and might be worthwhile starting points for stock screening.

2 comments:

jmat said...

Thanks for all your work, much appreciated. Has anyone programmed a dollar volume flow indicator? DVF?

Brett Steenbarger, Ph.D. said...

Hi JMat,

I appreciate the interest. There are data services, such as the WSJ source I recently linked, that carry money flow information. The indicator I'm reporting on is my own transformation of these data, similar to what I do with the Adjusted NYSE TICK. I'll be reporting daily Dow dollar volume flow figures on my Trading Psychology Weblog (www.brettsteenbarger.com/weblog.htm).

Brett