This morning, I want to share a chart with commentary that every investor needs to understand and know about. It show's one of the most powerful fundamentals of how the market works. Below is the chart and commentary.

Yesterday, I had a conversation with an Advanced subscriber where I discussed what charts I looked at as I started the day. I always start with the Options Liquidity chart, then I look at the Stock Market's Inflowing LIquidity, followed by the Institutional Buying and Selling activity, and then followed by the Multi-Indicator model. At that point, I have "a good picture" of what is happening and what the day should look like. So this morning, I will start with a merged chart of the Options Inflowing Liquidity MERGED with the Institutional Buying and Selling activity. I posted this chart once before, but today I wanted to post it again so that everyone understands how these two work in the stock market ... the chart is below.

The chart below show's the Options Inflowing Liquidity merged with the data of Institutional Buying and Selling activity.

What I see in the chart is that the Options Inflowing Liquidity often LEADS the action of what Institutional Investors do. An easy place to see this relationship was this last May. Note the fast red line on the Timing Indicator ... it is the thin red line and it moved down and below the blue horizontal line before the Institutional Investors went to Distribution.

And once in a while, the Timing Indicator turns at the same time that Institutional Investors move to Distribution. That says that Institutional Investors still have the power to turn the market in a different direction. So, the Options Inflowing Liquidity levels can often predict a market turn before Intuitional Buying and Selling action. The message? Look at both of them, and look at the Options Inflowing Liquidity chart first.