I see the phrases "....strong /great /huge /or outstanding money flow and buying... " used quite often in the stock synopses of the daily. I know that positive money flow and buying are good things. Are you using the buying indication to clarify that this is positive money flow, or is it something else? Also, is the Relative Strength often referred to, the RSI, or is it RS comparative (although I don't know what it would be compared with other than say an industry/group index)? (September 29, 2001)
We use money flow as a confirmation of what the price and volume action is showing us (that is 90% of our analysis). We do not base buying or selling decisions on it, but use it to either support our analysis or raise the issue as to whether we missed something in our analysis. Sometimes money flow just does not give much of an indication as it merely tracks the price up and down. What we look for is some divergence: if we see money flow way up and price still in a base but ready to breakout, we love that. That would tend to support our belief in the pattern and that a move higher is coming. On the downside, if we see price trying to hold at support but looking weak and money flow is tanking ahead of it, that indicates the move lower may be coming. It is not as strong an indicator as price and volume, trendlines, etc., but it is useful.
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