Custom Formula Collection

Investor Preference Index

This indicator was discussed in the December 1997 Technical Analysis of Stocks &
magazine, page 19. The article was written by Cyril V. Smith Jr.

"This indicator, a long - term stock market investment tool, compares the performance of the S&P 500 to the New York Stock Exchange index to measure sentiment. The theory is that investors have a preference for certain types of investments, blue chips versus mid-cap, during phases of a bull market."

To plot this in MetaStock for Windows, follow these instructions. When complete, if you save this as a chart, you will simply need to load the chart and it will recalculate using the newest data.

  • Open a chart of the S&P 500.
  • Open a chart of the New York Stock Exchange index.
  • Drag the S&P 500 price plot into the NYSE chart.
  • Drop the indicator listed below on the plot of the S&P 500. The plot will turn a different color when you are pointing at it.
  • The resultant plot is the Investor Preference Index.

Investor Preference Index Formula:

System test:

  • Enter Long
  • Close Long
    Fml("Investor Preference Index")<97.6 AND ROC(Fml("Investor Preference Index"),2,$)<=(-.04)

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