Turn Up the Volume

There are numerous technical indicators that I ignore because a simple reading of the price and volume will usually say the exact same thing without adding to the noise. However, indicators that combine price and volume action can be very helpful in seeing what is happening in a particular security or index.

Here are three charts of the SPY, QQQQ, and IWN respectively. Ignore the price lines of the charts and instead focus on the two technical indicators below the price lines.

The first is of the Chaikin Money Flow. It attempts to measure the amount of money flowing into and out of a stock. You can read more about it here. Whenever the indicator has a green mountain appearing formations like those below it indicates money is flowing into the stock.

The second is the On Balance Volume indicator. You can read more about it here. A rising line indicates money is flowing into a stock and a declining line indicates money is flowing out of a stock.

The point of these graphs is simple: two technical indicators are telling us that money is flowing into all three securities, and has been for about nine months.