donderdag 12 juni 2014

Smart Money Index (Correlation Economics)

Here's my own fabricated Smart Money Index. Entirely free of charge. This Smart Money Index is a leading indicator for what the Dow Jones will do after a few months time.

What I did is look at the average, opening and the closing prices of the Dow Jones historical numbers and compared them to the previous close. The Dow Jones historical prices can be found here: http://stooq.com/q/d/?s=^dji

My Formula:
SMI = previous closing price - (opening price- previous close) + (closing price - average price)

Correlation Economics: SMI Index
As you can see, the bubble in 2000 can be predicted with my formula. And the bottom of 2009 can also be predicted. In 2014, we see that the red curve is flattening out while the blue curve is still going straight upwards, which means we are in bubble territory now.

So follow the Smart Money!

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