Placing the Money Flow Index Under Scrutiny For The Blackstone Group LP (BX)

The Money Flow Indicator for The Blackstone Group LP (BX) has touched above 60 and has found a place on investor’s radar as it potentially nears the key 70 mark.  The MFI indicator is an oscillator which ranges between fixed values of 0 and 100 and as with most oscillators divergences form a major part of trading with the MFI indicator.  Traders look for divergence between the indicator and the price action. If the price trends higher and the MFI trends lower (or vice versa), a reversal may be imminent.  Market tops tend to occur when the MFI is above 70 or 80. Market bottoms tend to occur when the MFI is below 20.

Investors should however be wary of trading these levels blindly. As the warning goes, an overbought market can remain overbought for an extended period. Strong trends can present a problem for these classic overbought and oversold levels. The MFI can become overbought, and prices can simply continue higher when the uptrend is strong. Conversely, the MFI can become oversold, and prices can simply continue lower when the downtrend persists.  Like the RSI, this indicator is best used in conjunction with another indicator as confirmation. 

Many new investors may be frantically researching the best way to study the stock market. It is hard to say with any certainty which approach will work out the best. Traders may tend to gravitate towards studying the technical, while longer-term investors may be more likely to use fundamental analysis. Of course, many individuals will opt to use a combination of both. Determining the individual risk tolerance and time horizon can play a big part in deciding which way to tackle the market. Short-term trading can be highly risky and may not be suitable for certain individuals. Long-term investing may be the favored way to get into the stock market, but this may vary from person to person. Investment strategies can range from super simple to ultra complex. The one thing that most stock market followers would agree on is that there is rarely any substitution for hard work, dedication, and putting in the required hours of study.

When undertaking stock analysis, investors and traders may choose to view multiple technical levels in addition to the MFI. The Blackstone Group LP (BX) currently has a 14-day Commodity Channel Index (CCI) of 86.62. Investors and traders may use this indicator to help spot price reversals, price extremes, and the strength of a trend. Many investors will use the CCI in conjunction with other indicators when evaluating a trade. The CCI may be used to spot if a stock is entering overbought (+100) and oversold (-100) territory.

We can also do some further technical analysis on the stock. At the time of writing, the 14-day ADX for The Blackstone Group LP (BX) is 20.56. Many technical chart analysts believe that an ADX value over 25 would suggest a strong trend. A reading under 20 would indicate no trend, and a reading from 20-25 would suggest that there is no clear trend signal. The ADX is typically plotted along with two other directional movement indicator lines, the Plus Directional Indicator (+DI) and Minus Directional Indicator (-DI). Some analysts believe that the ADX is one of the best trend strength indicators available.

Interested investors may be watching the Williams Percent Range or Williams %R. Williams %R is a popular technical indicator created by Larry Williams to help identify overbought and oversold situations. Investors will commonly use Williams %R in conjunction with other trend indicators to help spot possible stock turning points. The Blackstone Group LP (BX)’s Williams Percent Range or 14 day Williams %R currently sits at -13.65. In general, if the indicator goes above -20, the stock may be considered overbought. Alternately, if the indicator goes below -80, this may point to the stock being oversold.

Tracking other technical indicators, the 14-day RSI is presently standing at 72.60, the 7-day sits at 82.98, and the 3-day is resting at 78.90. The Relative Strength Index (RSI) is an often employed momentum oscillator that is used to measure the speed and change of stock price movements. When charted, the RSI can serve as a visual means to monitor historical and current strength or weakness in a certain market. This measurement is based on closing prices over a specific period of time. As a momentum oscillator, the RSI operates in a set range. This range falls on a scale between 0 and 100. If the RSI is closer to 100, this may indicate a period of stronger momentum. On the flip side, an RSI near 0 may signal weaker momentum. The RSI was originally created by J. Welles Wilder which was introduced in his 1978 book “New Concepts in Technical Trading Systems”.

For further review, we can take a look at another popular technical indicator. In terms of moving averages, the 200-day is currently at 33.09, the 50-day is 31.51, and the 7-day is resting at 34.13. Moving averages are a popular trading tool among investors. Moving averages can be used to help filter out the day to day noise created by other factors. MA’s may be used to identify uptrends or downtrends, and they can be a prominent indicator for detecting a shift in momentum for a particular stock. Many traders will use moving averages for different periods of time in conjunction with other indicators to help gauge future stock price action.

Investors are always looking for any little advantage when trading the stock market. Scouring all the various data regarding publically traded companies can be overwhelming at times. Once the investor becomes familiar with the basics, they may be able to dive in deeper and focus on the essentials. Creating a winning strategy may not occur overnight. There may be times when even the best crafted plan does not play out as expected. Being flexible and having the proper tools in place can help the investor see the clearer picture when markets get muddy.