Jack Ablin, chief investment officer of Chicago’s Harris Bank, said the Smart Money Index shows the recent stock market slide may have reached a bottom.
The SMI was popularized by money manager Don Hays. It tracks buying early in the day, which is considered emotional, news-driven activity, versus activity later in the day when institutional investors have had a chance to interpret market trends.
The SMI hit bottom in mid-August with the S&P 500 but has since rallied to mid-July levels.
“While the Smart Money index is not one of our primary metrics, it has been a useful guide in gauging bottoms,” Ablin said in an email. “The index plunged in line with the S&P in October 2008 but rallied leading into the March 2009 bottom. In a market with few technical positives, the Smart Money index is a standout.”