Following the Fund Flows

Hey! There’s a really informative webinar coming up on February 23rd from SpotGamma called “Vanna - Feel The Force (IT’S A TRAP!!!)”

To register for the webinar, please visit this link. I think it will be very helpful and give some good insight into how options impact the market.

Our View

One of the things I have always followed is money flows, which we see every day on the MrTopStep Imbalance Meter. 

Whenever there is a prolonged decline, I pay close attention to the NYSE 3:50 ET order imbalance (which I provided to all my desk customers). I'll admit that it's not always a market-moving event, but there are a lot of times the ES moves sharply before and after, so I don't think it's something that should be overlooked, especially if you have the historical data. 

In this newsletter, we keep track of the imbalance in total billions. But it's not just about trading the close, it's about tracking international flows. Obviously, we already know billions moved out of stocks two years ago and moved into bonds, but after a 24% rise in the S&P 500, its important to keep following the money. 

Over the week of February 14th, investors pumped a net $9.12 billion into global equity funds, marking their largest weekly net purchase since Dec. 27, 2023. The largest part of the inflows went into US funds.  Does that support the markets going higher? I think so in a longer view, but after Friday's weak close, we could see some more selling.