Tuesday 26 December 2006

Smart Money Still Down

The Emini closed up 8.50 points at 1,428.75 on Tuesday. Low volume bounce today but all trend indicators are still down. Check out the Smart Money indicator chart below.

Emini Smart Money Image

The Emini opened up 0.75 points at 1,421.00, made a quick low at 1,420.75 then raced ahead in the first 30 minutes. The market then settled down and slowly ground higher for the rest of the day. The high reached was 1,429.50 and the close was just off the high at 1,428.75. Range for the day was close to average at 8.75 points but volume was very low at 0.3 million contracts traded.

All my trend indicators turned down after 16 December and although they are reaching over-sold levels none have turned back up. Today is likely to be just a low volume bounce before new lows are made and large buying volume comes back into the market.

Smooth Smart Money indicator

The chart above is of the Smart Money indicator, labeled Secret #3. Just a recap, this indicator measures professional activity by comparing the last hour’s trade with the rest of the day. As we’ve said before, the professionals or “smart money” trade later in the day, while non-professionals are more active at the open. The beauty of this indicator is that it leads the market and the turns, indicating trend change, are very smooth with little whipsaw action.

The indicator signaled Emini weakness in mid-November and mid-December. It also picked out good buying opportunities in this extended up market at the beginning of November and beginning of December. The Smart Money indicator readings at these turning points were -61 and -47. Today's reading was only -23 and so we might have a couple more days to go before reaching true over-sold levels.

Emini trading articles filed under Smart Money Index :