An advanced index valuation tool that compares market index performance against base money supply using a rainbow of multiplication and division factors.
Explore complementary indicator rolesHow it works
The indicator calculates index valuation by tracking a country's base money supply (M0) and creating a visual rainbow representation above and below the money supply line. The rainbow uses multiplication factors from 1x to 10x above the line and division factors from 0.8x to 0.2x below the line.
By mapping these factors, traders can visually assess whether an index is undervalued or overvalued relative to the available money supply. The methodology allows for comparative analysis across different global indices, providing a unique perspective on market valuation beyond traditional financial metrics.
Why it may be useful
This indicator offers traders a macroeconomic perspective on index valuation by linking market performance directly to monetary supply dynamics. It provides a broader understanding of market movements by considering the fundamental relationship between money supply and index pricing.
By presenting a visual rainbow scale, the indicator helps traders quickly identify potential over or undervaluation scenarios across different global markets. This approach can offer insights into potential market corrections or opportunities that might not be apparent through standard technical analysis methods.
When to explore it
The index valuation rainbow is most effective for long-term investment strategies and macro-level market analysis across specific global indices. It is particularly useful for investors interested in understanding broader economic trends and monetary policy impacts on market performance.
Traders should apply this indicator when conducting comprehensive market research, evaluating long-term investment opportunities, or seeking to understand the relationship between monetary supply and market valuation. It is especially relevant for indices in major economic regions like the US, EU, Japan, China, and other listed markets.
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What we’ve verified
Access, alerts and repainting behaviour have not been independently verified for this indicator. Check the creator’s current publication and settings.
General descriptions and classifications are recovered research. Verified details above identify the specific checks we have completed. Check the creator’s current publication for later changes.
