1. Money

Market Internals Take the Stock Market’s Pulse

Traders Vote on Stock Market Direction With Their Dollars

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There are times when it is important to know which way the market is trending and if a change is coming.

Traders look for opportunities in following a trend or opportunities when the market reverses direction.

Unfortunately, there are no direct signs that tell you what the market in going to do in the very near future.

However, you can get a good idea by watching the flow of money into and out of the market.

The idea is if more money is going into the market (buyers) than is coming out (sellers), you can expect prices in general to continue rising.

If more money is flowing out (sellers), then expect prices to fall.

A change in either of these flows indicates the market may be ready to reverse itself.

Think of investors voting on market direction with their money.

A group of indicators that traders use to calculate direction are called market internals.

These measures look at the New York Stock Exchange and Nasdaq and measure, in one form or the other, how traders are voting with their dollars.

Are they saying prices will rise or fall or change direction from the current trend?

Four of the most commonly used indicators are:

  • The TRIN
  • The TRIN/Q
  • The TICK
  • The TIKI
  • The VIX

Each one of these indicators measures a form of money flowing into and out of the market – in either the NYSE or Nasdaq.

What you want to follow with each is how it is changing over time. This change is your clue about market direction.

Read about these important market indicators:

The TRIN and TRIN/Q

The TICK

The TIKI

The VIX

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