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  • kennethkohwk

Smart Trader Indicator: Risk on for Oct-Nov?

Just sharing a propriatary Smart Trader Indicator.


This is not a "perfect" model, but it's trained for the last two years. There must be an assumption that the sentiment behavior structure of the market did not change much in the last two years. If so, then it's possible that it's Risk On for the month.


1) The top chart in the S&P500.

2) The middle chart is the smart trader indicator, it's a smoothed out measurement of option activity. When the line gets above the upper bound (1.1) and then cuts downward, it's the 1st sign that the market sentiment might be shifting to "Risk on."

3) The bottom chart measures momentum of the Smart Trader Indicator. When the black crosses downward to the red, it's the 2nd confirmation of the 1st sign.


Conclusion: Whenever 2) and 3) has a signal, it typically signals a longer bullish move, meaning dips are good accumulation points on broad market related stocks.


Note: There is a small probability of a false positive. However, the last two years have shown that longer bullish moves don't start until 2) and 3) hit. This is not meant to an absolute signal, rather, it should be viewed as circumstantial evidence. To have convictions of a longer move, it's best to combine this with analysis of the fundamentals.


Take care everyone! Have a great end-of-year holiday!

For educational purposes only. The signals posted does not prescribe any trading decisions. Consult a financial advisor before initiating any investment or trading decisions.

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