By Nigam Arora
The Federal Reserve, President Trump and Congress have come up with $6 trillion in stimulus and relief programs to help the economy.
Stock market investors are cheering and not many are talking about the long-term risks from all the new borrowing.
Prudent investors ought to take a look at segmented money flows before making any buying or selling decisions.
Segmented money flows are like an X-ray of stocks — they see under the surface.
Let’s explore with the help of two charts.
Please click here for an annotated chart of the SPDR Dow Jones Industrial Average ETF /zigman2/quotes/208954582/composite DIA -0.02% , which tracks the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -0.07% . For the sake of transparency, this chart was previously published and no changes have been made.
Please click here for a chart showing segmented money flows in 11 popular technology stocks. Money flows are based on algorithms created at the Arora Report.
Note the following:
• The first is a monthly chart giving investors a long-term perspective.
• Consider looking at the second chart in the context of the long-term perspective given by the first chart.
• The first chart shows the support-resistance zone and “mother of support zones.” For more details, please click here.
• The second chart shows that smart money flows are mildly positive for shares of Amazon /zigman2/quotes/210331248/composite AMZN +1.72% , Intel /zigman2/quotes/203649727/composite INTC +1.99% and Microsoft /zigman2/quotes/207732364/composite MSFT +1.02% . The smart money is professional investors such as fund managers and institutions.
• The second chart shows that Alibaba /zigman2/quotes/201948298/composite BABA +3.96% is the most interesting among this group of 11 technology stocks because smart money flows are mildly positive but momentum crowd money flows are negative. The momentum crowd is regular investors chasing stocks that have posted big returns.
• The second chart shows momentum crowd money flows are extremely positive for shares of Apple /zigman2/quotes/202934861/composite AAPL -0.10% , Advanced Micro Devices /zigman2/quotes/208144392/composite AMD +3.98% , Netflix /zigman2/quotes/202353025/composite NFLX +1.52% and Tesla /zigman2/quotes/203558040/composite TSLA +3.62% .