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Is There Enough Liquidity in the Market?

When there is a lot of money available for buying an item, supply goes down and prices go up.

The same happens in the stock market. When lots of money moves in, Liquidity levels move from Contraction to Expansion. When Liquidity hits an expansion level, competition for stocks will drive prices up and the overall market will propel upward.

Currently, the market is showing a short term bias for the upside, but there is one disturbingly missing ingredient so far.

What is it? Liquidity.

Liquidity levels remain in Contraction. Daily movements are showing oscillating moves, so volatility will remain high while this goes on.

What do we need next? We will need to see the Liquidity indicator move up and make a higher/high than the May 27th high (see the red arrow). It takes inflowing liquidity to sustain up moves because without it, up moves falter. (Today's Liquidity Indicator chart is presented as a courtesy to our free members and can be seen daily on our paid subscriber sites.)

NYSE and Liquidity Flows

 

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