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To recap the SMDM following today's trading...., the opening rally is
classified as DM so its first 30 minute net change gets a negative value
because the price action was up. The last hour is classified as SM and it
was a downer so it gets a negative value. The sum of those two begets the
one day SMDM Index(cyan dot in middle plot). This also continues the
downtrend divergence between the SMDMsummation and the INDU. Convention has
it that this has bearish connotations as the SM sells in advance of a drop
and buys in advance of a rally, at least in theory that is the promotion.
bobr
http://www.oextrader.com/sigma_trader
http://www.zubee.com
----- Original Message -----
From: "BobR" <bobrabcd@xxxxxxxxxxxxx>
To: <realtraders@xxxxxxxxxxxxxxx>
Sent: Wednesday, December 26, 2001 5:32 AM
Subject: Re: [RT] RE: - Smart Money Dumb Money?
> 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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> >
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> >
> >
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> >
>
>
>
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Attachment:
Description: "SMDM.GIF"
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