The Conference Board’s Leading Economic Index® is a popular indicator to watch for potential recessions ahead, and the latest reading shows a 2nd consecutive drop month-over-month.

The LEI hasn’t gone much of anywhere for a year, showing signs of plateauing. Its Bollinger Band has tightened to a near-record degree, showing that the index has flattened out over the past year.

Using a long time frame, we can see still that it was not a successful “get out now” signal for stocks. Across most time frames, the S&P was negative only once or twice, and overall average returns and risk/reward were better than random. There was a definite bias toward staples stocks and away from discretionary ones, however.

Smart Money Flow Index

The Smart Money Flow Index (or Smart Money Index) is based on the premise the "smart money" trades at the end of the day while "dumb money" trades at the start of the day. This indicator particularly catches traders' attention when it goes down (headline: SMART MONEY IS SELLING).

Despite its popularity and catchy name, it hasn't been particularly useful for timing purposes. The premise that "smart money trades at the end of the day" is increasingly not true, due to the popularity of ETFs.

By Troy Bombardia

https://sentimentrader.com

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Only logged in users are allowed to post comments. Register/ Log in

The Market Oracle is a FREE Financial Markets Forecasting & Analysis web-site.
(c) 2005-2024 MarketOracle.co.uk (Market Oracle Ltd) - Market Oracle Ltd asserts copyright on all articles authored by our editorial team and all comments posted. Any and all information provided within the web-site, is for general information purposes only and Market Oracle Ltd do not warrant the accuracy, timeliness or suitability of any information provided on this site. nor is or shall be deemed to constitute, financial or any other advice or recommendation by us. and are also not meant to be investment advice or solicitation or recommendation to establish market positions. We do not give investment advice and our comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to enter into a market position either stock, option, futures contract, bonds, commodity or any other financial instrument at any time. We recommend that independent professional advice is obtained before you make any investment or trading decisions. By using this site you agree to this sites Terms of Use. From time to time we promote or endorse certain products / services that we believe are worthy of your time and attention. In return for that endorsement and only in the cases where you purchase directly though us may we be compensated by the producers of those products.