The Official Source for Bloomberg Professional
The Smart Money Flow Index (SMFI) has long been one of the best kept secrets of Wall Street. Almost everyone has heard of “Smart Money”, “Dumb Money” and the so called “Crowd”, and that is exactly what our indicators are all about. Top performing money managers, savvy investors and institutional asset managers are relying on them. One of them is the Smart Money Flow Index for instance, which is also featured on the BLOOMBERG PROFESSIONAL Service under SMART <Index> <GO>.
Just ask yourself these questions: Would you be a buyer if you see that the public and the option market (dumb money) go on a buying spree while the “Smart Money” are heavily short at the same time? Do you know when to part company with the crowd and take profits? The key is to know when the smart guys are trend-following or contrarian. This is exactly what our research is specalized in. We publish the Smart Money Flow Index for free just to give you a glimpse of an idea about the research we offer in our members section.
Free Daily Updated Smart Money Flow Index
Bullish Signals: Positive divergences between the SMFI and the Dow Jones Industrial Average
Bearish Signals: Negative divergences between the SMFI and the Dow Jones Industrial Average
How to Interpret the SMFI?
- Bullish: Bullish divergences between the SMFI and the Dow Jones Industrial Average
- Bearish: Bearish divergences between the SMFI and the Dow Jones Industrial Average
The Easy-To-Read Version of the Smart Money Flow Index:
- Since the signals of the SMFI are based on negative and positive divergences, they are often subject of interpretation. Above all, divergences can last for quite a time making it even more complicated for novice users to identify precise entry and exit points.
- For that reason, we offer an easy-to-read-version of the Smart Money Flow Index in our members section, the WSC Capitulation Index. The WSC Capitulation Index is based on the same formula like the Smart Money Flow Index, but uses an additional mathematical tweak to derive precise signals. This indicator is known for its incredible timing and has, therefore, become one of the most popular indicator among our members.
- First, we calculate the divergences between the SMFI and the Dow Jones Industrial Average (Capitulation Index) and then we use a statistical method (the Fisher Transformation) to measure the selling pressure caused by Smart Money and Dumb Money. Whenever, the Fisher Transformation of the WSC Capitulation Index passes its bearish threshold (above 0.8), Smart Money is selling aggressively into the market whereas Dumb Money is taking the opposite side of the trade (and vice versa).
- Additionally, we offer our members the Big Picture Indicator which is condensing all signals of our published market indicators, plus the Weekly Market Regime Outlook, where we interpret the readings of all published market indicators (like the SMFI) on a weekly basis.
Further Readings About the Smart Money Flow Index
The Smart Money Flow Index (SMFI) has been featured in many articles. Below, we will provide links to some of them. The articles about the SMFI are interesting and informative, so you should definitely check them out if you have time.
- Bloomberg: Don’t Buy the Stock Rally? The Smart Money Does!
- Bloomberg: The Stock Market Rally Looks a Bit Squirrely
- Barrons: Interview with market pro Don Hays in Barron’s about the Smart Money Flow Index
- Financial Post: Follow the Smart Money to the beat market
- Bloomberg: Powell Shows Markets He Won’t Be Rattled by Volatility – The smart money may head for the hills anyway
- Godmode Trader: Technical Analyst of Godmode is talking about the Smart Money Flow Index [German]
- Bloomberg: Smart Money Buying Stocks Shows S&P 500 Rally Has Legs
- Bloomberg: Bloomberg nominates WallStreetCourier.com’s Smart Money Flow Index as “Chart of the day”
Bloomberg’s official source for the Smart Money Flow Index
Since 2001, WallStreetCourier has been the official source for the Smart Money Flow Index by Bloomberg Professional Service. Below, you will find a screenshot of our Smart Money Flow Index published by Bloomberg.
The Idea of the Smart Money Flow Index
Identify the Buying Behavior of Smart- versus Dumb Money
The idea of the SMFI is to identify the buying behavior of Smart- versus Dumb Money in the U.S. stock market. The Smart Money Flow Index is based on the concept of Don Hays’ Smart Money Index (SMI), but uses a more efficient formula to remove emotional transactions. The SMFI was developed by R. Koch in 1997 and is a trademark of WallStreetCourier.
The Smart Money Flow Index is calculated according to a proprietary formula by measuring the action of the Dow during two periods: shortly after the opening and within the last hour. The first minutes represent emotional buying, driven by greed and fear on the part of the crowd, based on good and/or bad news. During the opening, there is also a lot of buying on market orders, as well as short covering. Smart money typically waits until the end, and they tend to test the market beforehand by shorting heavily in order to gauge the market’s reaction. Afterwards, the big investments are made. These heavy hitters tend to have the best possible information available, and they have an edge on all the other market participants.
Why the ignorant crowd has to lose!
- The markets are an ever and everything discounting mechanism as well as the product of the behavior of all their participants and, of course, not everybody can win. In order for every market to function, the majority of the participants has to lose.
- This majority is usually the uninformed and ignorant crowd, who rather relies on hot tips or even sheer luck like a gambler, instead of doing some homework and spending an extra buck for valuable and useful information.
- There are many ways to beat the market, but one of the most successful methods is certainly to go with the “Smart Money” and against the so called “Crowd”. The content of our pages is unique and no website on web offers such an abundance of financial research for any investor or trader who believes in technical market analysis.
- Should you ever come across such a site we would appreciate it if you let us know.
When Will You Join Smart Money?
Identify Major Regime Shifts Points With Our Smart Money Indicators
- Retrieve the Buying and Selling Behavior of Smart Money on a Daily Basis.
- Countercheck Divergences with our Supporting Indicators in Order to Remove any Misinterpretations.
- Follow our WSC Capitulation Index, an “easy-to-read” version of the SMFI.
More information and related content:
- Actionable Market Regime Outlook: Evaluates the Sustainability of the Current Market Regime & Red-flags Shifts!
- Market Indicators: Measure Trend, Trend Quality and Market Sentiment to Identify Major Inflection Points
- The Big Picture Indicator: Know When To Buy The Dip & When To Trade Trends.
- WSC ETF Model Portfolios: Designed to Achieve Maximum Diversification Across all Market Regimes!
- Uncover Shifts in Major Futures Markets: CoT Indicators for 45 Futures Markets to Identify Major Shifts.