Monday, January 28, 2013

TT Flow of Funds Indicator

MetaStock SPRS Series - Week 103 - TechniTrader® Stock Discussion for MetaStock Users - TT Flow of Funds Indicator - January 28, 2013
By: Martha Stokes C.M.T.
The TechniTrader® Flow of Funds TTFF indicator is designed to help traders and investors see when funds are moving into or out of a stock. There are currently over 12,000 funds trading stocks and many have billions of dollars to place. Their presence in the market is dominant with over 80% of all order activity being some sort of fund buying or selling.

Therefore if you as a trader or investor simply watch MACD, Bollinger Bands, Stochastic or some other price indicator you are missing a huge portion of the analysis you need to do in order to be consistently successful. Systems and strategies alone will not give you consistent results.

TT Flow of Funds tracks institutional activity and can help you see tops and bottoms earlier as well as anomalies that warn of a sudden change of trend.

Chart 1

In the Chart above we can see TT Flow of funds, which is the blue line in the bottom chart window. The red line is the subordinate indicator that helps you read the TT Flow of Funds indicator better.

First of all TT Flow of Funds should be trending upward, with steady relatively consistent upward action.

Secondly keeping an eye on the subordinate indicator which is a linear regression indicator, we can watch cross over patterns. During sideways patterns the TT Flow of Funds will oscillate, but during trending patterns it will step upward as the stock moves up. When Flow of Funds ebbs or wans, it will be flat with the subordinate indicator hovering tightly. As it moves up, a sharp stairstep pattern emerges which is a signal that heavy Flow of Funds occurred.

This was confirmed with Reuter Lippor Reports the following month that indeed, Mutual Funds had a huge influx of money by small investors.

Two areas to watch closely for in using TT Flow of Funds are the extreme high range and extreme low range. These areas are early topping and bottoming warnings.

Here is a chart view after the topping pattern formed in TT Flow of Funds. The chart below shows the peaking action of TT Flow of Funds indicating this was a top, before the top confirmed. The V line on TT Flow of Funds indicates a bottoming or strong support level for the stock.

Chart 2

TechniTrader Flow of Funds TTFF is one of the TechniTrader® proprietary indicators created exclusively for MetaStock Charting Software Users.

Trade wisely,

Martha Stokes, C.M.T.
Member of Market Technicians Association
Master Rated Technical Analyst: Decisions Unlimited, Inc.
Instructor and Developer of TechniTrader® Stock Market Courses
MetaStock Partner
©2013 Decisions Unlimited, Inc.

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