This helped them to spot market trends in their infancy. However, with longer trading hours and greater volumes being traded, this method of stock analysis is virtually impossible to accomplish using traditional methods. Using advanced technology, ticker tape reading is now more precise than ever before by allowing computers to track every trade. This enables money managers to more accurately calculate money flow, which, simply put, is the movement of cash in and out of stocks. Utilizing this concept, Laszlo Birinyi monitors the intraday movement of stocks to determine positive and negative money flow in order to locate future trends.
Money flow is important because it can be a significant indicator of a stock's future price.
Monitoring the direction of money flow is key to determining prospective trends. This indicator has often confirmed the strength or weakness of a price trend. By watching the money flow line, a top or bottom of a stock may be uncovered. Conversely, the money flow line rising in the face of a declining price trend could indicate a bottom may be at hand and money is moving in. Utilizing the latest in computer technology combined with his 20 years of Wall Street experience, Laszlo Birinyi has developed a highly unique ranking criteria that enables the analysis of the divergence between money flow and a stock's price.