Last Hour of Trading & the Smart Money Index

While I was traveling, I noticed that the markets would be pretty soft midday — then at the close, they rallied furiously to make up much of their losses.

Today’s action was the same — rather ugly throughout the morning and early afternoon, than very serious buying the last 30 minutes.

During the 1990s bull market, some people used to track what was called the Smart Money index — the difference between what the dumb excitable buyers did during the first hour of trading, and the more thoughtful purchases made not in the heart of the moment at the end of the day.

Any thoughts on this? Is there something — fund managers. algos, HFTs, or even some conspiracy theory that explains this?

What say ye?

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