Todd Harrison: Revisiting the Smart Money
The largest divergence since 2007 remains in play.
I return from a respite with my family to find the markets higher than they were a week ago.
In fact, the all-important S&P (INDEXSP:.INX) 1850 level is again underfoot despite non-confirmation from the banks (below BKX (INDEXSP:BKX) 71.50), tech (under NDX (INDEXNASDAQ:NDX) 3640),and the small caps (beneath RUT (INDEXRUSSELL:RUT) 1182).
Only the transports (above TRAN (INDEXDJX:DJT) 7600) are supportive of a continuation of the holiday-thinned rally, at least through the lens of the sub-sector price action. The biotech complex, for its part, broke the 200-day (IBB (NASDAQ:IBB) 220) but is marginally above it as of this post.
Before I unplugged last week, I wrote The SMART Money Strikes Again to highlight the divergence that had preceded the previous downdraft.
The following description of the Smart Money Flow Index is from Bloomberg (paraphrased):
In an effort to remain consistent in our approach, I've updated those charts below.
You will notice that we are still at levels last seen in 2007, which may prove to be a false tell but should, at the very least, be considered when making financial decisions.
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Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at firstname.lastname@example.org.
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