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The Smart Money Flow Index (SMFI) has long been one of Wall Street’s best-kept secrets. Almost everyone has heard of ‘Smart Money,’ ‘Dumb Money,’ and the so-called ‘Crowd.’ Such indicators play a crucial role in our market regime research. Top-performing money managers, savvy investors, and institutional asset managers rely on them. One of them is the Smart Money Flow Index, for instance, which is also featured on the BLOOMBERG PROFESSIONAL Service under SMART <Index> <GO>
Just ask yourself these questions: Would you be a buyer if you saw that greed among market participants is skyrocketing while the ‘Smart Money’ is heavily short at the same time? Do you know when to follow the hype or when it is time to part ways? The key is to know when the smart guys are trend-following and when they act contrarian. This is exactly what the Smart Money Flow Index is all about.
The idea of the SMFI is to identify the buying behavior of Smart- versus Dumb Money in the U.S. stock market. The Smart Money Flow Index is based on the concept of Don Hays’ Smart Money Index (SMI), but uses a more efficient formula to remove emotional transactions. The SMFI was developed by R. Koch in 1997 and is a trademark of WallStreetCourier.
The Smart Money Flow Index is calculated according to a proprietary formula by measuring the action of the Dow during two periods: shortly after the opening and within the last hour. The first minutes represent emotional buying, driven by greed and fear on the part of the crowd, based on good and/or bad news. During the opening, there is also a lot of buying on market orders, as well as short covering. Smart money typically waits until the end, and they tend to test the market beforehand by shorting heavily in order to gauge the market’s reaction. Afterwards, the big investments are made. These heavy hitters tend to have the best possible information available, and they have an edge on all the other market participants.
Seize the opportunity to invest with the insight of seasoned professionals. Don’t hesitate – sign up for free today and harness the power of the Smart Money Flow Index to make informed financial decisions and stay ahead in the market.
We are the official provider and single source of truth for the Smart Money Flow Index for Bloomberg. Consequently, our premium members receive the SFMI hours before it is published on Bloomberg or anywhere else.
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