Market-on-close (MOC) order imbalances show how money flows as the stock market closes. They indicate whether large institutions are buying or selling, which influences market sentiment and direction. At InvestingLive.com, we analyze MOC data to better understand market trends. Recent data shows a positive net flow of about +$200 million over the last 10 sessions, with more money coming in than going out. The 20-day moving average also points to an upward trend. However, data from August 25 revealed a steep outflow of $192 million, suggesting that caution is increasing and impacting market momentum.

Future Trends

The future direction depends on whether big outflows continue or if we see strong inflows again, like those on August 18, 21, and 22. The medium-term outlook is mostly positive, but recent outflows signal caution. It’s essential to watch for signs of stability in flow or if another outflow suggests deepening market weakness. Using MOC data helps gauge market sentiment, but it’s not the only indicator. The current analysis shows a slight bullish trend, but the recent outflows hint at a shaky foundation. Keeping an eye on future imbalances could shed light on market directions. Recent money flow presents mixed signals for derivative traders. Although the trend has been positive recently, yesterday’s large outflow of $192 million indicates hesitation among big institutions. This situation suggests it might not be the best time for bold, one-sided market bets. This cautious attitude from institutions makes sense given the current economic conditions. The latest inflation report from July 2025 shows a steady Consumer Price Index at 3.4%. All attention is now on the upcoming Jackson Hole symposium for insights on interest rate policies. Such uncertainty can lead to volatile price movements, complicating straightforward directional trades.

Volatility and Trading Strategies

The CBOE Volatility Index (VIX) is currently around a low level of 15, signaling a lack of immediate fear in the market. However, the recent selling pressure suggests that this low volatility could change if institutional outflows continue. For derivative traders, this might be a good time to consider inexpensive protection, such as out-of-the-money puts on major indices like the S&P 500. In this uncertain environment, options strategies like spread trades may be useful in the coming weeks. A bearish put spread can take advantage of a potential slight downturn while limiting risk if the market suddenly rises. Conversely, a bullish call spread could bet on a return to inflows without the risk of unlimited losses from shorting puts. We observed a similar situation in the summer of 2023, when institutional flows turned unpredictable after a strong period. That phase led to sideways trading with higher volatility for several weeks. History suggests that when large players are uncertain, the market often remains stagnant. Consequently, the most crucial data will be the next few MOC imbalance figures. If we see another significant outflow today or tomorrow, it would confirm that institutions are pulling back and justify seeking more downside protection. If strong buying returns, it could mean yesterday’s outflow was just a temporary dip, making selling put premiums a viable strategy once more. Create your live VT Markets account and start trading now.

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