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Hi, I've got a question about how the MFI indicator works:
Let's say that a stock is going down and the smart money is shorting it. After a sizeable decline, there's often what's called a "dead cat bounce" where price goes up for a short while and commentators (and traders) will often say that "the shorts are covering their positions".
If this is indeed the case, if shorts are covering, would you expect the MFI to go up, or go down?
I wish I understood the MFI better---it's all about "money flow" of course, but I would think that the MFI would go up, wouldn't it, because even if you're just covering a short, money is still flowing into the stock, right? Or have I got it all wrong?
I'd really appreciate someone straightening me out on this. Thanks!