In the stock market, changes in market cap can be disproportionate to the actual money traded, leading to wealth creation or destruction.
Over time, market changes can cancel each other out, and short-term price fluctuations in a single stock might not reflect actual money flows.
Using money flow analysis can provide insights into stock market valuation and understanding trends over longer periods, accounting for factors like stock buybacks and QE.
Capitulation happens when investors lose hope in the market and sell their investments at low prices, often during tough times like a financial crisis.
Technical analysis, like using candlestick charts, helps identify capitulation patterns that signal potential major changes in price trends.
Capitulation can present opportunities for profit, depending on whether an investor is in a long or short position - it's neither inherently good nor bad, but a strategic move.