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Big Money Index Added To My Blog

Apr. 20, 2011 5:11 AM ET
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Diffusion's Blog
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Some of my friends may know about the Big Money Index, an index I composed to gauge the money flow into or out of the equity market. Supposedly the money flow drives the price. So the market, usually represented by the S & P 500 index, will move higher if money flow is positive, and lower if money flow is negative. Most of the time S & P 500 moves along with BMI. Occasionally we may see a divergence, meaning that the money flow is not reflected by the market, yet. Since eventually we expect S & P 500 to follow BMI, such divergence offers good trading opportunities.

I've added BMI to my blog to the lower right corner (http://trustamind.blogspot.com/). Although the chart will be automatically updated every five minutes, you don't have to fix your eyes on it. For one this is mainly for updating S & P 500. For two usually we are looking for a divergence spanning a couple of days.

As of today we see a positive divergence between BMI and S & P 500. So I expect S & P 500 to make new high soon, if BMI still works.

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