How the market confidence index is defined
The confidence index on this site is a 0–100 trend-state gauge with 50 as neutral. This page explains its components, why it is led by trend, and what the five bands mean.
Why it is led by trend
Confidence shows up in a sustained direction, not in any one day's move. Scoring the day's change directly lets a single technical rebound lift the index sharply even after the price has broken below its medium-term averages. So sixty percent of the weight sits on trend structure: where the price is within its moving-average system, which way the averages point, and how far it is from its recent high. A single day only enters through 5-day momentum. This definition has applied since October 2026, and earlier history has been recomputed with the same formula so the chart is consistent end to end.
The four components
Trend structure (±30) looks at the KRX close relative to its 20-day and 60-day averages, the slope of the 20-day average over the past week, and the drawdown from the highest close in 60 days; once the ADR has 20 trading days of history it is blended 65% KRX, 35% ADR. Short-term momentum (±10) is the change over the last 5 trading days. Volume confirmation (±5) compares 5-day with 60-day average volume, adding when heavy volume accompanies gains and subtracting when it accompanies losses. Premium deviation (±5) measures the ADR premium against its own 60-trading-day median: the premium has run high for a long time and its level alone says little about sentiment, while a departure from its norm shows offshore money is keener or more cautious than usual.
Bands and updates
The score is 50 plus the four components. Each component is tanh-compressed, so the total naturally stays between 0 and 100; there is no cross-day smoothing, and the components on the dashboard add up to the score. 80 and above is very strong, 60–80 strong, 40–60 neutral, 20–40 weak and below 20 very weak. The change on the dashboard compares with the score 5 trading days earlier, and separate markers show whether the KRX close is below its 20-day and 60-day averages. The index is recomputed every ten minutes while a market is open, and no point is written on weekends when every market is shut.
What it cannot answer
This is a composite description of the current trend state, not a forecasting model, and it has not been backtested for timing value. The component weights are a judgement call, and different weights produce a differently shaped curve. Using it to ask whether the trend is strong or weak, and whether it is better or worse than last week, is reasonable. Reading it as a buy or sell signal goes beyond what it was built to do.
This page documents how this site computes the figure. It is not investment advice.