Blood and water

There's another very curious thing that has struck me from my readings this year of the Passion accounts. When the soldiers were instructed to end the sufferings of Jesus and the other two bandits, they found that he (Jesus) was already dead, so they didn't break his legs (which would have caused almost sudden suffocation and extreme pressure on his arms). Instead, one of the soldiers pierced his side with a lance.

If Jesus was indeed already dead, it would be physically impossible for blood to be flowing in his veins, so how was it that blood (and water) flowed out from the newly inflicted wound?

Had the lance pierced his stomach lining, where there may have been some water still residing? Was this what flowed out? Or is this flowing of blood and water meant as a hidden sign left for us by the writer of the gospel account so that we would believe that even in death, Jesus was God, and therefore still alive and in the process of overcoming death?