Market-on-close (MOC) order imbalances provide insights into the flow of money as the stock market closes. These imbalances reveal the buying or selling tendencies of large institutions, impacting the market sentiment and direction. At InvestingLive.com, we track and interpret these MOC data to better understand market behaviour.
Recent figures show a net positive flow of approximately +$200m over the last 10 sessions, with more inflows than outflows. The 20-day moving average of these imbalances also indicates positive inflow trends. However, the most recent data on 25-August showed a sharp outflow of $192m, suggesting increased caution and impacting market momentum.
Future Trends
Future trends depend on whether large outflows continue or if strong inflows are observed, similar to those on 18, 21, and 22 August. The medium-term trend appears net positive, yet recent outflows suggest caution. It’s advisable to monitor whether flows stabilise or if another outflow hints at increased market weakness.
Utilising MOC data is a helpful method to gauge market sentiment, albeit not the sole one. Overall, current analysis indicates a slight bullish tendency, but recent outflows suggest a fragile footing. Tracking future imbalances could provide insight into upcoming market directions.
Based on the recent flow of money, we are seeing a mixed signal for derivative traders. While the trend over the last few weeks has been positive, yesterday’s large $192 million outflow shows that big institutions are getting hesitant. This suggests that now is a poor time for aggressive, one-sided bets on market direction.
This institutional caution is understandable given the economic backdrop. With the latest July 2025 inflation report showing a stubborn Consumer Price Index at 3.4%, all eyes are now on the upcoming Jackson Hole symposium for clues on future interest rate policy. This uncertainty often leads to choppy price action, which can be difficult for simple directional trades.
Volatility and Trading Strategies
The CBOE Volatility Index, or VIX, has been trading near a relatively low level of 15, which indicates a lack of immediate fear in the market. Yesterday’s selling pressure, however, hints that this low volatility might not last if we see more institutional outflows. For derivative traders, this is a signal to consider buying some cheap protection, like out-of-the-money puts on major indices like the S&P 500.
Given this “wait-and-see” environment, strategies like option spreads could be effective in the coming weeks. A bearish put spread could capitalize on a potential modest downturn while defining your risk if the market suddenly rips higher. Conversely, a bullish call spread could be used to bet on a return to inflows without the unlimited risk of shorting puts.
We saw a similar setup back in the summer of 2023, when underlying institutional flows turned choppy after a period of strength. That period led to a market that traded sideways with increased volatility for several weeks. History suggests that when big money can’t make up its mind, the market often goes nowhere fast.
Therefore, the most critical data point for us will be the next few market-on-close imbalance figures. If we see another significant outflow today or tomorrow, it would confirm that institutions are reducing exposure and justify adding more downside protection. If strong buying returns, it would signal that yesterday was just a blip and selling put premium could be a viable strategy again.
