Stock market recovery is confirmed by new capital flows

The recent rise in Dutch equities has been supported by the inflow of fresh capital. Fresh money has flowed into the market in recent weeks. At least that is what we can deduce from the rebound in money flow, which this week reached its highest point in the past two months.

New cash flows

The money flow indicator of the Dutch stock market is increasingly curling upwards. The inflow of frsh capital into Dutch equities is therefore well under way.

The Dutch stock market has rebounded sharply in a relatively short period of time. From the support around 627.35 points (the bottom of September 28), the AEX has risen to around 673 points, an increase of more than 45 points.

There was a difference of no less than 11% between the intraday low of October 13 at around 611.73 points (the spike day) and yesterday’s intraday high at 680 points. Only 14 exhibition sessions were needed for this. 

Beautiful month of October

Incidentally, the month of October resulted in a gain of 4.7% for the main index. This technical improvement validates the bottom formation process that the market has been working on for a few weeks now.

Moreover, the recent advance of Dutch equities is therefore also supported by the inflow of fresh capital, as witnessed by the revival of the money flow indicator. Today I look at the recent breakout of the AEX, as well as the improvement of the money flow indicator.

The AEX index is curling upwards

The Dutch stock exchange (AEX index) has improved considerably from a technical point of view. After the downward trend has been broken upwards, the AEX index has now also broken above the old resistance at 669.76 points (formed on October 5).

With these technical improvements, space has been made available for an attack on the next horde around 736.34 points (formed on August 4). Support is around 627.35 points (the September 28 bottom).

Fresh cash flow to equities

The money flow indicator shows a significant uptick. This signals that the inflow of capital to the Dutch stock exchange is increasing. The text continues below the graph.

Indication money flow

The money flow must always be compared with the course of the AEX index and has different positions:

Stock market up with high turnover: the money flow is increasing. The advance of the stock market is validated, so there is an inflow of fresh capital.

Stock market up with low turnover: the money flow lags behind. The rise of the stock market is not supported by turnover, so no inflow of fresh capital.

Stock market down with high turnover: the money flow is falling. The weak stock market is confirmed by high turnover, i.e. outflow of capital.

Stock market down with low turnover: money flow remains stable. The weak stock market is not confirmed by high turnover, so no outflow of capital.

In the calculation of this indicator, the exchange turnover on the Damrak and the price behavior are cumulatively processed.

An increasing money flow indicates the inflow of fresh capital. A falling money flow indicates that money is being withdrawn from the market. A sideways money flow indicates that the money flows are in balance.

What does money flow mean?

The money flow is the indicator that can reveal the hidden buying power (or selling pressure). This indicator is derived from the volume trend.

For example, the money flow indicator of the AEX shows the underlying money flows of the Dutch stock exchange. We keep track of the money flow of each individual share at the IEX TA desk.

The flow of money was first described by Joseph Granville. He called this indicator the On Balance Volume, in his book ‘New Key to Stock Market Profits’. The instacart stock price prediction is found online. The money flow used by Tostrams analysts is directly derived from Granville’s On Balance Volume.

In the calculation of this indicator, the stock market turnovers on the Damrak and the price behavior of the AEX are cumulatively processed.

How is the money flow calculated?

This indicator therefore shows the volume development. The volume of a positive day (if the AEX closes higher than the day before) is added to the cumulative value of the indicator and is subtracted from the value on a negative day (if the price closes lower than the day before).