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Sentiment starts to turn - money flow trends via BofA

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Analysts Notebook wrote a column · Apr 21, 2022 00:01
Money flow trends among sectors can be an effective guide for investors to gauge how the market is going to perform.
$Bank of America (BAC.US)$ has disclosed most recent money flow trends from its clients. Here are some insights that can be delivered from the charts below.
Sentiment starts to turn - money flow trends via BofA
·There is a significant divergence between the money flows in total stocks and ETFs, indicating the market may have reversed. Net inflows in total stocks have turned positive last week while capital starts to flow out of ETFs for the first time during the past four weeks.
Notes: According to research from Sentimentrader, high ETF volume relative to the volume in the underlying stocks is often a sign that uncertainty is high and the market is likely to suffer from a sharp plunge. Conversely, when things are going well and investors are confident in the prospects of their stocks, funds will flow into individual stocks instead of ETFs as stocks tend to perform much better.
·There was also a notable shift occurred in the money flow of the Consumer Discretionary sector, besides the Tech sector recorded a positive net inflow last week.
Notes: Market data since 1928 indicates that every time the S&P 500 fell to correction territory, sectors of Industrials, Tech, with Consumer Discretionary are most likely to outperform when the market reaches a true bottom. In comparison, Materials tend to outperform when there is a false bottom, according to a study conducted by Sentimentrader.
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only. Read more
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