Thursday, February 11, 2016

The Smart Money Indicator Is Showing Shades Of 2000, 2007 Tops..........

The Smart Money Indicator Is Showing Shades Of 2000, 2007 Tops

An indicator based on the first hour versus last hour of stock trading has undergone a shift similar to those seen at the prior 2 cyclical tops.

The SMI is exhibiting some interesting behavior currently.

A glance at the chart below 
indicates that its behavior over the past 18 years is pretty straightforward. The major inflection points have occurred near significant tops and bottoms in the S&P 500. Lows in the SMI occurred at the end of 2000 and the end of 2007, just as the stock market was entering into cyclical bear markets. A potentially similar low may have occurred in August last year.

This recent turn is much more dramatic and convincing as the SMI is making a clear higher high above its transitional peaks of the past 20 months. If this move in the SMI does follow the course of its predecessors in 2000 and 2007, it could indicate a longer-term shift – lower – in the market's trading behavior.


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