Market Review & Update

Over the last several weeks, we have discussed how the “negative money flow” environment was keeping a lid on prices short-term. To wit:

“As discussed last week, the ‘sell signal’ triggering on a short-term basis coincides with our concerns of quarter-end rebalancing for pension funds. I suspect we may have some additional quarter-end rebalancing risk early next week. However, buying on Thursday next week, as second-quarter positioning gets underway, would not be surprising.

As such, hold positions early next week and look for weaknesses to add to exposures as needed.“

Such turned out to be the case as the markets slopped around early in the week. However, that changed as markets exploded to new highs on Wednesday and Thursday as portfolio managers charged back into the stocks sold off during the Archegos debacle.

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As shown, the break out to new highs for the S&P 500 confirmed the positive turn in “money flows.” Notably, the breakout got further confirmation from combined “money flow” and “MACD” buy signals.

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Yesterday’s “3-minutes” video goes into more detail about the turn of the “money flow” indicators as we enter one of the stronger months of the year.