1. The first Strategy comes from Marty Chenard who is the Advanced Market Analyst at StockTiming.com. "Jesse Livermore said it best ... The stock market is all about money. Money goes in and the stock market goes up. Money flows out and the stock market goes down."
Given the above, I have to say it is the net amount of money that matters on a daily basis. In other words, we are talking about the net amount of money after all the buying and selling is done. Therefore, tracking the net Inflowing-Outflowing Money in the stock market, and the net Inflowing-Outflowing Money going into the Options Market is critically important.
Here is why: Net Inflowing-Outflowing Liquidity in the stock market relates to Jesse Livermore's comments and is very sensitive to changes in the Fed's QE money flows.
At the other end of the spectrum is the Options market as related to the VIX. The VIX measures the market's expectation of the 30-day volatility and represents the implied volatility of a hypothetical at-the-money OEX option with 30 days to expiration. The leverage on an option can be 10 to 1, so there is a greed factor involved.
*** Imagine that a very large Wall Street firm was planning to buy or sell enough equities to move the stock market in the next few days. With that kind of advanced knowledge, don't you think they would take advantage of their own inside knowledge, and buy or sell high-return options prior to their initial stock equities Buy/Sell actions?
This implies that Inflowing and Outflowing Liquidity levels in the Options market can be predictive of what is going to happen in the stock market. "Being armed with the net Liquidity flows in the Stock Market and the Options Market is a critical advantage that empowers all investors who have and use the information."
Below is a recent chart ... decide for yourself:
In this chart, the (lower) two bottom indicators are where we start. The red mountain chart is about the (daily) Inflowing and Outflowing Options Liquidity levels. Above the center line shows a positive inflow and below the center line is a negative outflow. Over the green horizontal line is a "strong" Inflowing Liquidity level, and below the maroon horizontal line is a "strong" Outflowing Level. This indicator measures the short term trending for trades placed.
The very bottom of the chart shows changes in the bias level of the red indicators movements and can be helpful in the timing of trades.
On top of the chart, we have an Options Timing Indicator. This indicator measures the cycle length of the move. Most investors would rather be out of a move when the thick red line goes negative, and/or when the thin red/blue trend lines start converging or converge. (This chart is updated and shown every day on our Advanced Investor subscriber site.)
In the next two sessions, we will look other two Winning Stock Investing Strategies. When we show those two particular charts, you will also see an excellent market correlation as well.