Money flow for the Dow 30 industrial stocks recently turned positive, adding to the evidence of buying support for the current market. Across the NYSE, NASDAQ, and ASE, Friday registered 505 new 20-day highs against 194 lows--the first time since the decline began that we've seen more new highs than lows. My measure of Demand (an index of the number of stocks closing above their volatility envelopes) was 205 on Friday; Supply was 22. That means that over nine times as many stocks displayed significant upside price momentum as downside.
Throughout the decline, periods of positive money flow have been brief and have led to renewed selling. So far, the market has been able to feed on strength. While this action isn't sufficient to rule out future price weakness, it does constitute one necessary element in a bottoming process.
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