Indicators | MAY 1997
The Pring Money Flow Indicator by Martin Pring
The Pring Money Flow Indicator by Martin Pring Interest rates often lead the stock market. Here's a technique to compare the yield on three-month commercial paper to the Standard & Poor's 500, creating an indicator for the stock market. Over the past several years, the concept of intermarket relationships has gained in popularity. The analyses for these relationships are calculated using the comparison of one series against another, a good example being gold against the dollar. It is possible to derive useful indicators that take advantage of these relationships. A key intermarket relationship exists between equity prices and short-term interest rates. It is a well-known fact that changes in the trend of short-term interest rates lead those of stock prices at major turning points. I find it useful to compare the progress of the Standard & Poor’s Composite Index with an S&P Composite adjusted by the level of short-term interest rates. In this comparison, the adjusted series is calculated by dividing the S&P by the yield on three-month commercial paper.
by Martin J. Pring
Technical Analysis of STOCKS & COMMODITIES
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