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Todd Harrison: The Smart Money Flashes Caution
A flashing red signal coincides with all-time highs.
Todd Harrison    

Editor's Note: Todd posts his vibes in real time each day on our Buzz & Banter where subscribers can follow over 30 professional traders as they share their ideas in real time. Want access to the Buzz plus unlimited market commentary? Click here to learn more about MVPRO.

 I think it's time we stop, children, what's that sound; everybody look what's going down. . .
-- Buffalo Springfield

The following description of the Smart Money Flow Index is from Bloomberg (paraphrased):

The Smart Money Flow Index (SMFI) is calculated by taking the price of the Dow Jones Industrial Average (INDEXDJX:.DJI) at 10:00 a.m. on any given day, subtracting it from the previous day's close, and adding it to the next day's closing price. The first 30 minutes represent "emotional buying," driven by greed and fear of the crowd; smart money typically waits until the end of the day.  If/when the DJIA makes a new high that is not confirmed by the SMFI, there is usually trouble ahead. Check out the chart.
 

Chart source: Bloomberg

Random Thoughts:

  • The ECB meeting tomorrow morning is the next big catalyst, with folks whispering about QE and (gasp!) the specter of negative interest rates. Listen closely to the vernacular for clues hidden in the fuse.
     
  • Bloomberg is reporting that high-frequency trading (HFT) accounts for more than 35% of spot currency volume as of October 2013, whereas it is +/- 50% of equity volume vs. 66% four years ago (Rosenblatt Securities).  I shared some thoughts on the topic yesterday in case you missed 'em; one thing for sure, there's a lot more here than meets the eye.
     
  • Biotech bounced the last two sessions although it's still in a pretty pronounced downtrend. IBB (NASDAQ:IBB) 253 to IBB 260 is tranched resistance on further lift, if and when.
     
  • Speaking of HFT, I chewed through the first five chapters of Flash Boys, the Michael Lewis book, last night. I enjoyed it, insofar as I've felt the market hasn't traded naturally in years, and I'm quite interested to see how much of that was HFT and how much was "other."
     
  • As long as the S&P 500 (INDEXSP:.INX) remains above 1850, the technical target is 1960.  The banks are supportive of that above BKX (INDEXSP:BKX) 71.50, and the trannies, small caps, and Nasdaq-100 (INDEXNASDAQ:NDX) would similarly vote "yes" with sustained moves above TRAN (INDEXDJX:DJT) 7600, RUT (INDEXRUSSELL:RUT) 1182, and NDX 3640.
     
  • VXO (INDEXCBOE:VXO) 11.60; that's 18% above all-time support and 11.60 points away from ultimate support.
R.P.

Twitter: @todd_harrison

Follow Todd and over 30 professional traders as they share their ideas in real-time with a FREE 14 day trial to Buzz & Banter.
< Previous
  • 1
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No positions in stocks mentioned.

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 todd@minyanville.com.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

Todd Harrison: The Smart Money Flashes Caution
A flashing red signal coincides with all-time highs.
Todd Harrison    

Editor's Note: Todd posts his vibes in real time each day on our Buzz & Banter where subscribers can follow over 30 professional traders as they share their ideas in real time. Want access to the Buzz plus unlimited market commentary? Click here to learn more about MVPRO.

 I think it's time we stop, children, what's that sound; everybody look what's going down. . .
-- Buffalo Springfield

The following description of the Smart Money Flow Index is from Bloomberg (paraphrased):

The Smart Money Flow Index (SMFI) is calculated by taking the price of the Dow Jones Industrial Average (INDEXDJX:.DJI) at 10:00 a.m. on any given day, subtracting it from the previous day's close, and adding it to the next day's closing price. The first 30 minutes represent "emotional buying," driven by greed and fear of the crowd; smart money typically waits until the end of the day.  If/when the DJIA makes a new high that is not confirmed by the SMFI, there is usually trouble ahead. Check out the chart.
 

Chart source: Bloomberg

Random Thoughts:

  • The ECB meeting tomorrow morning is the next big catalyst, with folks whispering about QE and (gasp!) the specter of negative interest rates. Listen closely to the vernacular for clues hidden in the fuse.
     
  • Bloomberg is reporting that high-frequency trading (HFT) accounts for more than 35% of spot currency volume as of October 2013, whereas it is +/- 50% of equity volume vs. 66% four years ago (Rosenblatt Securities).  I shared some thoughts on the topic yesterday in case you missed 'em; one thing for sure, there's a lot more here than meets the eye.
     
  • Biotech bounced the last two sessions although it's still in a pretty pronounced downtrend. IBB (NASDAQ:IBB) 253 to IBB 260 is tranched resistance on further lift, if and when.
     
  • Speaking of HFT, I chewed through the first five chapters of Flash Boys, the Michael Lewis book, last night. I enjoyed it, insofar as I've felt the market hasn't traded naturally in years, and I'm quite interested to see how much of that was HFT and how much was "other."
     
  • As long as the S&P 500 (INDEXSP:.INX) remains above 1850, the technical target is 1960.  The banks are supportive of that above BKX (INDEXSP:BKX) 71.50, and the trannies, small caps, and Nasdaq-100 (INDEXNASDAQ:NDX) would similarly vote "yes" with sustained moves above TRAN (INDEXDJX:DJT) 7600, RUT (INDEXRUSSELL:RUT) 1182, and NDX 3640.
     
  • VXO (INDEXCBOE:VXO) 11.60; that's 18% above all-time support and 11.60 points away from ultimate support.
R.P.

Twitter: @todd_harrison

Follow Todd and over 30 professional traders as they share their ideas in real-time with a FREE 14 day trial to Buzz & Banter.
< Previous
  • 1
Next >
No positions in stocks mentioned.

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 todd@minyanville.com.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

More From Todd Harrison
Todd Harrison: The Smart Money Flashes Caution
A flashing red signal coincides with all-time highs.
Todd Harrison    

Editor's Note: Todd posts his vibes in real time each day on our Buzz & Banter where subscribers can follow over 30 professional traders as they share their ideas in real time. Want access to the Buzz plus unlimited market commentary? Click here to learn more about MVPRO.

 I think it's time we stop, children, what's that sound; everybody look what's going down. . .
-- Buffalo Springfield

The following description of the Smart Money Flow Index is from Bloomberg (paraphrased):

The Smart Money Flow Index (SMFI) is calculated by taking the price of the Dow Jones Industrial Average (INDEXDJX:.DJI) at 10:00 a.m. on any given day, subtracting it from the previous day's close, and adding it to the next day's closing price. The first 30 minutes represent "emotional buying," driven by greed and fear of the crowd; smart money typically waits until the end of the day.  If/when the DJIA makes a new high that is not confirmed by the SMFI, there is usually trouble ahead. Check out the chart.
 

Chart source: Bloomberg

Random Thoughts:

  • The ECB meeting tomorrow morning is the next big catalyst, with folks whispering about QE and (gasp!) the specter of negative interest rates. Listen closely to the vernacular for clues hidden in the fuse.
     
  • Bloomberg is reporting that high-frequency trading (HFT) accounts for more than 35% of spot currency volume as of October 2013, whereas it is +/- 50% of equity volume vs. 66% four years ago (Rosenblatt Securities).  I shared some thoughts on the topic yesterday in case you missed 'em; one thing for sure, there's a lot more here than meets the eye.
     
  • Biotech bounced the last two sessions although it's still in a pretty pronounced downtrend. IBB (NASDAQ:IBB) 253 to IBB 260 is tranched resistance on further lift, if and when.
     
  • Speaking of HFT, I chewed through the first five chapters of Flash Boys, the Michael Lewis book, last night. I enjoyed it, insofar as I've felt the market hasn't traded naturally in years, and I'm quite interested to see how much of that was HFT and how much was "other."
     
  • As long as the S&P 500 (INDEXSP:.INX) remains above 1850, the technical target is 1960.  The banks are supportive of that above BKX (INDEXSP:BKX) 71.50, and the trannies, small caps, and Nasdaq-100 (INDEXNASDAQ:NDX) would similarly vote "yes" with sustained moves above TRAN (INDEXDJX:DJT) 7600, RUT (INDEXRUSSELL:RUT) 1182, and NDX 3640.
     
  • VXO (INDEXCBOE:VXO) 11.60; that's 18% above all-time support and 11.60 points away from ultimate support.
R.P.

Twitter: @todd_harrison

Follow Todd and over 30 professional traders as they share their ideas in real-time with a FREE 14 day trial to Buzz & Banter.
< Previous
  • 1
Next >
No positions in stocks mentioned.

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 todd@minyanville.com.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

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