how do you see the dow index going today Dow Jones and S&P commentary: Signal Watch Dr Bob Hard Right Edge Raptor Research Charting by Snoball: Dow Chart S&P Chart Drinks & Break Time at: GD's Famous Tea Room & Watering Hole"

DOW JONES @ LIVECHARTS

Bond holiday tomorrow so could be low volumes - ideal conditions for the "smart money" to have some fun.

Anyone else here trading the Dax? It has been a really good play lately - up and down 3% on a regular basis - filling gaps consistently. A quick analysis of the Dax shows that the print of 3488 and 3524 leaves 3578 the next stop, although the candles were left with a Bearish Harami/Shooting Star image, which leaves the market looking vulnerable risking setbacks to 3434, then 3368, with 3316, down to 3265, then 3202 and 3100 to follow. Momentum strength gives 9 day RSI at 57 and daily stochs positive. I've my eye on the 3559-3602 gap to be filled at some stage soon should things stay bullish.

jojo - Smart money.
I posted a chart on Friday on antoher BB which plotted the SMFI (Smart money Flow Index) on the Dow. It's not making any new highs but what one really wants to look out for is divergence.


Dow 10-10-03


Blue line - SMF Index
Red (dotted)line - DMF Index - (That's D for Dumb) - my own proprietary index calculation
Orange line - 50 dMA

Notice how when the Dumb Money Flow Index makes a new high, the market tends to fall. When the DMFI makes a new low, the market rises.

Jeroo, I saw your post on 'the other BB' and have saved it.
Unfortunately I can't calculate it with my charting software as I only
have end of day data. I'll have to do it manually but can't chart it -
or haven't figured out how yet.

It looks like the DMF tries to find equilibrium with the SMF and takes
the price with it. Very interesting.

jeroo/jojo

please can you give a v.quick lesson on SMART v. DUMB money flow - not come across it before. How does the 'divergance' offer us opportunity?

the chart looks very interesting.

t.

zarif,
I've been experimenting with a short trending system for the Dow.
It is easy to calculate manually and gives a daily level at which the trend will change.

Essentially it consists of two moving averages.
The 2 period simple moving average of the High and the Low for the close of the day.

The trend is Long when the CLOSING price goes above the previous days
High ma and stays long until the trend goes short. The trailing stop is the
low moving average. The intraday price can breach the trailing stop.
The trend is short when the CLOSING price goes below the previous days
Low ma and stays short until the trend goes long. The trailing stop is the high ma.
The intraday price can breach the stop.

Here is the chart showing the system.
Ignore the "pc2" arrows. I'll remove them next time I upload.

The main disadvantage of the system is that it is based on closing prices which means
you can have some hefty price swings against you if you follow this to the letter.

Let me know if this is of use and I will update it daily.

I will email the link to you if you want to put it in the header.

The Smart Money Flow Index has long been one of the best kept secrets of Wall Street. Everybody knows the importance of a closing price and other last hour indicators like the Closing Tick. The Smart Money Flow Index is therefore 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.

The Smart Money Flow Index is calculated like the Advance-Decline Line. Just start at any given day, subtract the price of the Dow at 10 AM from the previous day's close and add today's closing price. The result is plotted on a chart, together with the closing price of the Dow only. Whenever the Dow makes a high which is not confirmed by the SMFI there is trouble ahead. It is said that this indicator is suitable only for investors with a longer time horizon but it's worth watching on a daily basis all the same. Such investors should buy blue chips when the indicator gives a buy signal, and sell and sell short on a divergence.

The most intelligent way to approach the markets is to watch what the so called "smart money" and the so called "dumb money" is doing. The dumb money, or the so called "crowd", are getting consistently beaten by the more street smart and very shrewd, professional and experienced traders.

My DMF Index is not an exact reversal of the SMFI but a proprietary index calculation that also contains a volume weighted aspect.

jeroo

thanks for that.

did i read earlier that you had a thread dedicated to S/D MF's ?

I posted similar comments over on a notoriously bearish BB US thread. Even when faced with bullish facts, the posts remain bearish so I thought I'd throw in a little weight to balance things up a bit. It's purely ad hoc posting as I find the comments that "we are done for" pending an '87 style crash somewhat galling - even though I tend towards the bearish outlook. Mind you, an image of a wagging finger with Henry Weingarten on the end of it just popped into my head.

fat finger

Jeroo

Much more sophisticated explanation than I would have given - many thanks.

terod

By smart money I'm simply referring to the institutions and professionals who decide market direction and move it to their maximum advantage. All I try and do is ride on their coat tails!

Afternoon everybody:
Nice to have jeroo and jojo on board with us.
I reckon the market is going to open higher today and am getting ready for some quick stabs at longs.
What are your views and what levels are we likely to reach today and resistance levels .

rgds
zarif

Thank you zarif - that's a nice welcome

Looking at the ES Z3 futures which ticked up as high as 1045.25 and has stayed bound within 1.25 points for the last 4 hours, it's looking steady for a rise at the open at least. I'll be watching Thursday's high (1048.28) to see the reaction to that level. The YM03 futures put in a high of 9734 a couple of hours ago but has since settle back down towards 9715.

Earning will be in focus with a fair amount of the good news priced in to stock. Perhaps selling news? Especially if earning come in only in line. Motorola have set the ball rolling already with earnings topping expectations coming in at 5 c per share - Thompson First Call est. was 3c.

Ok - back to work. I'll pop back later this evening

Thanks zarif.

Difficult market this week with lots of important earnings announcements to digest. However today I am looking for a retrace if S&P reaches 1048-50 early on.

Good Luck.

if i may....

re the MA's shown above on FTSE and DOW very much show buy and sell signals as i read the charts.

what is the reasonsing for the 34 and 55 days - is this someones tried and tested method (please excuse the nature of my question(s) but am new to trading indices and just want to understand what i'm seeing/reading.

the crosses appear v.specific/accurate indicators for short-term trading - is this what i'm meant to interpret?

thanks in advance.

zarif - best of luck today !

it's me again, just had a thought....those MA's aren't minutes are they? in the post above i assumed days...

thanks.

tammy.

terod,

34 and 55 are nice Fibonacci numbers.

1,2,3,5,8,13,21,34,55,89 .........

Thanks terod:
Just closed the first long of the day opened at 9669 on friday and closed at 9750 =81 pts @25/pt nett gain of 2025.

Just looking for some shorts now.
Will let u know how i get on.

rgds to everyone and happy hunting

zarif

zarif

i'd love to see what's on mrs. zarif's shopping list week !!! well done.

t.

Terod:
Nature has palyed agood hand and by the way I had luck smiling on me as she has gone to pick the kids from school and not back yet!!!
I wonder how long i will be able to contain it to myself.
Anyway better to give to her than Mr.Gordon brown or Ig index or ....

As they say "the hand that gives is the hand that reaps"
Waiting for the shorts to conme in play now- will let u know


rgds
zarif