Spot ETF creations and redemptions require the issuer to transact in the underlying, so the flow is real buying and selling rather than sentiment — the mechanism in ETF flows are a spot bid you can watch.
What people then do with the number is usually wrong.
The sequence
Investors decide, shares are created, the issuer buys, the price impact happens, and the total is published afterwards. By the time you read a flow figure, everything it describes has already occurred.
So flows cannot lead price in any tradeable sense. If anything the causation runs the other way over short horizons: price rising attracts allocation, so strong flows frequently follow strong performance.
What the number is genuinely good for
Regime, not entry. Sustained net creations over weeks describe a structural bid that persists across sessions. Sustained redemptions describe the opposite. Neither says anything about tomorrow, and both say something about the environment.
Divergence. The interesting case is when flows and price disagree — persistent creations while price stalls, or redemptions while price holds. That says the flow is being absorbed by something on the other side, which is information a price chart does not carry.
The calendar caveat
Flows only exist on US business days. A weekend or holiday produces zero not because interest vanished but because the mechanism is closed — the two-clock problem again. Reading a holiday zero as a signal is reading the calendar.
And it is not the whole demand picture
The ETF is one access route. Direct spot purchases, offshore venues and derivatives exposure are all outside it, so ETF flow is a visible slice rather than the market’s demand. It is over-weighted in analysis precisely because it is the part that gets published.