Some Indicators & Charts explained

At Pretiorates' Thoughts, charts and quantitative indicators are at the core of our analysis. Many of these tools have been developed and refined over years of hands-on market experience and have proven their value in real-world trading.

While our approach is deeply rooted in quantitative methods, we also integrate other forms of technical analysis — such as Elliott Wave, Fibonacci, and Point & Figure, etc. — to form a well-rounded and flexible market perspective.

Here is a selection of our indicators and charts:

Smart Investors Action

The “Smart Investors Action” indicator tracks the behavior of large investors, as they have a significant influence on index movements. By isolating their activities, we create a new curve. The light blue area highlights the deviation from the actual price development. An upward movement signals accumulation (bullish), while a downward movement indicates distribution (bearish). Red areas mark phases with high volume, which we refer to as “exaggerations.” The stronger these are, the higher the probability of a reversal—especially when a yellow dot appears, signaling an important “exaggeration point.”

Optimism/Pessimism of Investors

We use various tools to measure the strength of sentiments such as optimism and pessimism. During optimistic phases, negative surprises are better absorbed, meaning that they do not immediately lead to sharp corrections. Similarly, positive surprises during pessimistic phases are not rewarded with rising prices. However, optimism or pessimism can also become too strong, making trend reversals possible.

Market Pendulum

A pendulum swings freely back and forth under the influence of gravity, with the direction changing at a similar point each time. These alternating swings can also be seen on the stock market, which is never a one-way street. Even in the strongest trends, there are counter-movements. When the pendulum is falling, a decrease in upward momentum can be expected – and vice versa. This indicator is used for short-term timing. It can be used for fine-tuning the timing of investment decisions that have already been made.

Balance of Powers

The Balance of Power indicator measures whether the bulls or bears have greater strength based on cumulative daily movements. If the indicator reaches a high level, the bulls are likely to have exhausted their strength soon – and vice versa. If the indicator rises, bulls are better able to cope with negative surprises – and vice versa. Positive surprises, on the other hand, are always met with stronger gains – and vice versa.

Asset Strength

This indicator measures the strength of a trend for a specific asset based on various criteria. If the strength rises into the green zone, an investment should be considered. If the indicator falls back into the red zone, an investment in this specific asset is usually unattractive. This indicator is also interesting for asset management, where assets with a strength in the green zone are overweighted.