Capital flow analysis is the historical observation how capital rushes around the globe, driving markets up and down.  The flow of capital is the key to understanding bull market trends (rising) and bear market trends (declining).  The purpose of understanding capital flows is aim identify where and when the booms and busts in the global economy and investments will take place.

Human emotion drives the movement of everything, whether it runs into something (boom) or flees (bust).  Investors are concerned with the cycles of capital concentration and dispersion. The purpose behind cyclical analysis is to locate where capital concentration is heading.  When Capital Concentrates, Asset Prices Rise (GREED).  When Capital Flees, Asset Prices Crash (FEAR).  

Global capital flows have always created significant market uptrends.  Likewise, most losses have arisen from decisions that have failed to account for a reversal in the capital flows. 

Thanks to Martin Armstrong of Armstrong Economics for making this historical observation of how capital moves in a crisis.