Online Stock Trading | SMART Index not confirming run

SMART Index not confirming run


Filed Under Market Commentary |

What is the SMART index?
The Smart Money Flow Index is calculated by taking the action of the Dow in two 
time periods: the first 30 minutes and the close. The first 30 minutes represent 
emotional buying, driven by greed and fear of the crowd based on good and bad 
news. There is also a lot of buying on market orders and short covering at the 
opening. Smart money waits until the end and they very often test the market 
before by shorting heavily just to see how the market reacts. Then they move in 
the big way. These heavy hitters also have the best possible information 
available to them and they do have the edge on all the other market 
participants.  Whenever the Dow makes a high which is not confirmed by the SMFI 
there is trouble ahead. 

Let’s take a currrent look at the index:

SMART6-29-07.gif
I continue to see the indexes to move higher as price and volume points to higher prices.  The question is, does the Smart money hold out on their beliefs or jumps back in?  Time will tell, but we could be in for a powerful move upward if they decide to join bull crowd.

Market Speculator

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Comments

4 Responses to “SMART Index not confirming run”

  1. Gio on June 30th, 2007 6:41 am

    Hi MS,

    Nice chart. But it looks like the divergence occurred April 2005 to April 2006…Now there’s just a big gap. It does seem like a good indicator when it trends down (ie, post May 2006 has a steeper slope). I’m for following the big money, but its more for what sectors they go too, not so much what they do intraday. anyway, I’ll be checking out the SMART index more often.

    -gio

  2. Market Speculator on June 30th, 2007 2:24 pm

    Hi Gio,

    This isn’t for the day trader that is for sure. I am pointing out that the recent highs in the Dow have not been supported by the so called smart money. Remember, 3 out of 4 money manager fails to beat the S&P 500. Is the so called Smart money really that smart?

    MS

  3. Gio on June 30th, 2007 2:43 pm

    1 out of 4 succeed? Ha! Hey, did you get an iPhone yet?

  4. Market Speculator on June 30th, 2007 8:13 pm

    amazing huh?

    I did not get one, how about you? I am with Verizon so it’ll be a long time before they get anything like the iPhone.

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