BALTIMORE ( Stockpickr) -- Chances are, "flow of funds" doesn't enter into most investors' analysis of the markets. But traders who don't fully grasp how cash impacts stocks are doing themselves a major disservice. Flow of funds analysis isn't just a key to market mechanics -- it's also incredibly relevant to this summer's volatile market conditions.In today's Technical Primer, we'll take a look at how the flow of funds impacts market prices and how you can analyze this meaningful metric to figure out what's happening next for your portfolio. Simply put, "flow of funds" refers to the movement of money in the market. It's arguably the single most important concept that bridges the gap between that ethereal thing we call "the market" and the place where the rubber meets the road in technical analysis. At the end of the day, fundamentals, economic factors and news stories don't move stock prices; the flow of funds into and out of the market is the only thing that matters. Let me explain. >>Does Technical Trading Really Work? How Fund Flow Impacts Share Prices Back in high school, just when my attention was starting to turn to the stock market, I thought that when companies made money, their share prices simply increased as well. It was a logical assumption -- and one that many casual market observers still hold. But it's got a serious flaw. Increased earnings don't actually drive increases in share prices; it's the buying interest that comes from those earnings that physically drives prices higher. That's why stocks can fall even in the face of a strong earnings release. The flow of funds has everything to do it. Just like any other dealer or auction market, cash flowing into stocks results in increasing prices, while cash flowing out of stocks results in falling prices. That's because the flow of funds is just the physical manifestation of the supply and demand forces that drive technical analysis. As demand for stocks increases and cash flows into the stock market, for example, eager buyers outbid each other and sellers become less inclined to part with their shares, causing prices to rise. That flow of funds is absolutely required to move share prices.