Which of the following represents a "smart money" technical indicator? Choose the best answer.
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A. B. C. D. E. F.E
Of the choices listed, only "short sales by specialists" represents a "smart money" technical indicator. Technical analysts view a large increase in short sales by specialists as a bearish near-term indicator. Conversely, a decline in the ratio of short sales by specialists is viewed as a near-term bullish indicator. Data for short sales by NYSE specialists is published weekly in Barron's. The normal ratio of short sales by specialists has been approximately 40%, and technicians view a decline to 30% or below as a bullish sign. Conversely, technicians would view a ratio of 50% or greater as a bearish signal.
"Breadth of market" refers to the measure of advancing versus declining issues. The "Diffusion Index" is a measure of market breadth and is defined as the volume of advancing issues plus one-half of the volume of unchanged issues, divided by the total number of issues traded. Short interest measures the total volume of outstanding short positions, and the sentiment of futures traders is used by contrarian technical analysts, who take a contra approach. The "Block
Uptick/Downtick Ratio" is used to measure the near-term sentiment of institutions.