Fund flows of this size could mark a top, says Joe Friday

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by Kimble Charting

A year ago flows into ETFs were extremely low, actually the lowest in years, as many stock market indices were testing rising support off the 2009 lows. The crowd wasn’t adding money to ETFs as lows were taking place. In hindsight, this was a mistake by the majority. Below I look at ETF flows over the past few years with an inset chart of the S&P 500.

Nearly three months into this year, fund flows have surpassed money invested in the past few years by a large margin. Could that be a good sign for stocks? Could be!
The trend in the S&P 500, from a intermediate and long-term perspective remains solidly up. As fund flows are going vertical; the S&P 500 is testing the top of a 1-year rising channel and the 161% Fibonacci extension level, based upon last years (2016) “weekly closing highs and lows.” While testing the top of the channel and 161% level, the past couple of weeks the S&P has chopped sideways.  This week the S&P is making an attempt to break below rising support that has been in place since the election.
Joe Friday Just The Facts:  With fund flows at such a high level, the S&P 500 finds itself at a key price point, where the bulls do NOT want to see weakness start creeping into the market.
The crowd missed the boat last year at the lows, will it be different this time, as fund flows are sky high? Investors long the S&P 500 want it to break above the top of the rising channel and Fib 161% extension level, which comes into play at the 2,400 level.

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