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To quote from the book "Street Smarts", "The general thesis is that weak
hands (i.e., the public) tend to make emotional, uninformed decisions in the
first hour of trading. The professionals represent the smart money and
control the last hour of trading. The smart money index is comprised of the
net change in the DOW for the first hour versus the net change in the Dow
for the last hour." end of quote.
A bit of testing and visual observation suggests that the first half hour
gives a better reading than the first hour for the dumb money. This may be
due to faster communications and online trading where public orders are
filled faster in the first half hour since the concept first appeared in
Barrons years ago. Another reason may be the smart money comes in during
the second half hour and fades the first half hour trend. This has a basis
in the market profile theory of opening drive and first two 30 minute
brackets of the day. Chances are you've been subject to buying on the open
only to be in a loss 60 minutes later...gotcha!
bobr
http://www.oextrader.com/sigma_trader
----- Original Message -----
From: "BobR" <bobrabcd@xxxxxxxxxxxxx>
To: <realtraders@xxxxxxxxxxxxxxx>
Sent: Wednesday, December 26, 2001 5:11 AM
Subject: Re: [RT] RE: - Smart Money Dumb Money?
> Try formatting DM and PSM as points and SMT as a line. Personally, I
> haven't spent much time with this indicator. Looks like the smart money
has
> been selling lately. Attached are two indicators. One has the SMDM and
the
> other the SMDMsummation. The SMDM has had a minor plotting change from
the
> code posted back in June 2001. Code was adapted from a description of the
> Smart Money Index by Raschke and Connors in "Street Smarts". Since coding
> is not my forte....well you get the idea...caveates apply.
>
> bobr
>
> ----- Original Message -----
> From: "John Clemens" <jbclem@xxxxxxxxxxxxx>
> To: <realtraders@xxxxxxxxxxxxxxx>
> Sent: Wednesday, December 26, 2001 1:50 AM
> Subject: Re: [RT] RE: - Smart Money Dumb Money?
>
>
> > Hi Bob,
> >
> > I just came across this Smart Money Dumb Money index and I'm trying to
run
> > it, but after transfering it into TS4 I'm not getting much on the screen
> > except some pretty zig zagging colored lines. Can you give me an idea
> where
> > to start troubleshooting it. I'm using the default values for the
inputs.
> > I've tried it on 10 min and 60 min INDU charts, same result.
> >
> > John
> >
> >
> > ----- Original Message -----
> > From: "BobR" <bobrabcd@xxxxxxxxxxxxx>
> > To: <realtraders@xxxxxxxxxxxxxxx>
> > Sent: Wednesday, June 13, 2001 1:59 PM
> > Subject: Re: [RT] RE: - Smart Money Dumb Money?
> >
> >
> > > Clyde Lee is generously cleaning up the code. The maxbarsback + N is
> > > because I did not know about if Date<>Data[1] for the first day. If
> > > something isn't done with the first day's data it can skew the
indicator
> > by
> > > the price of the item being measured. The lower plot is the summation
> of
> > > the AM and PM defined time periods. The SMDM concept is definitely
> > > questionable from the system tests I made. It was profitable but not
> much
> > > better than two times a CD. Also the first half hour vs first hour
made
> a
> > > significant difference. StreetSmarts referred to the first and last
> hour.
> > > Once Clyde finishes the code you should be able to test various
> > > configurations of time.
> > >
> > > bobr
> > >
> > > ----- Original Message -----
> > > From: "Prosper" <brente@xxxxxxxxxxxx>
> > > To: "Real Traders" <realtraders@xxxxxxxxxxxxxxx>
> > > Sent: Wednesday, June 13, 2001 2:33 PM
> > > Subject: [RT] RE: - Smart Money Dumb Money?
> > >
> > >
> > > > Bob et al,
> > > >
> > > > I've been thinking about this SM, DM for a bit, I do think that
smart
> > > money
> > > > is influential at the end of the session but there is a lot of day
> trade
> > > > covering going on as well. I figure that the dumb money happens when
a
> > > short
> > > > term pivot occurs against the trend especially after any new high or
> new
> > > > low. I actually tend to think that the initial burst of the session,
> is
> > > > floor traders taking advantage of the lag time that off floor
traders
> > are
> > > > faced with. By the time the off floor traders see some direction and
> > place
> > > > an order, they are just being filled in time for the price to head
off
> > in
> > > a
> > > > new direction. It amounts the same thing as far as timing is
> concerned.
> > > >
> > > > I have had a few computer problems, so I can't include a chart, but
> how
> > > > about summing just the end of the day session and not include the DM
> at
> > > the
> > > > open. Or maybe even better would be to sum the net price difference
of
> > > pull
> > > > backs against the prevailing trends for a better DM value.
> > > >
> > > > Also why is 37 used with the Maxbarsback setting for 10 min. charts?
> > > >
> > > > If I get some data reacumulated I will have a better idea about this
> > Smart
> > > > Money Index.
> > > >
> > > >
> > > >
> > > > Prosper
> > > >
> > > >
> > > > To unsubscribe from this group, send an email to:
> > > > realtraders-unsubscribe@xxxxxxxxxxxxxxx
> > > >
> > > >
> > > >
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> > > >
> > > >
> > >
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> > >
> > >
> > >
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> > >
> > >
> >
> >
> >
> > To unsubscribe from this group, send an email to:
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> >
> >
> >
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http://docs.yahoo.com/info/terms/
> >
> >
>
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