Thursday, March 26, 2009

Stock Market Commentary: Rally Runs Counter to Weak Money Flow

Bulls will have enjoyed the past couple of weeks but there is a concern under the surface, chiefly the weak money flow into the market.

Money flow is on course to shift into positive territory but by the time it does it could be the trigger for the next downleg, much as it did last November. Contributing to such an outcome is the heavily overbought condition of stochastics.

The good news on this is the next downleg will likely turn out to be the best time to buy as a push to new lows doesn't feel like it's in the current market (for Nasdaq/Technology stocks). Time will tell but tech averages have behaved very well over the past 4 months and this strength will eventually reveal itself in a respectable rally.

Dr. Declan Fallon, Senior Market Technician, the free stock alerts, market alerts and stock charts website