Some investors seem to believe that the future financial performance of GM will be improving. If that’s true, that usually bodes well for the economy.
In 6 of the last 10 trading days, GM has declined in price while Money Flow data has been positive. This suggests that some investors don't think the price is going much lower.
An explanation might be helpful. Daily Money Flow is calculated by subtracting the dollar value of all uptick trades from the dollar value of all downtick trades. If the resulting number is positive, then money is flowing into the stock on upticks - if negative, then money is flowing out of the stock on downticks.
Since there must be a buyer for every seller - and a seller for every buyer - this is a useful metric to determine whether buyers or sellers are being most aggressive. If the trend persists for a period of time, one can judge whether the stock is being accumulated or distributed - and by inference whether the future value of the stock is likely to advance or decline.
In the recent trading history of GM, it's the buyers who have been most aggressive. To emphasize that point one need only ask the question, "Why buy on upticks, rather than just accumulate the stock as prices decline?" It seems logical to assume that the answer to that rhetorical question is that some buyers don't think that the stock is going lower and they're anxious to acquire the stock. |
