Valuation Multi-Asset [MTF]

Description This indicator is a specialized Intermarket Analysis tool designed to determine the relative valuation of an asset by comparing its performance against key global benchmarks (Currency, Commodities, Bonds, and Sector ETFs).

Unlike standard oscillators (like RSI) that only look at the asset's own price, this script calculates a Relative Value Index.

Underlying Concepts & Methodology The script operates on the principle of asset correlation and mean reversion ratios. The calculation logic follows these steps:

Ratio Calculation: It computes the price ratio between the Chart Asset and a Benchmark Asset (e.g., Symbol / DXY).

Smoothing: It applies a double smoothing method using Exponential Moving Averages (EMAs) to filter out short-term noise from the ratio.

Historical Normalization: Based on valuation theories (inspired by concepts like Larry Williams' valuation window), the script normalizes the smoothed ratio over a user-defined lookback period (default is 3 years/156 weeks). This ranks the current relative value between 0 and 100.

Key Features

Multi-Benchmark Comparison: Automatically compares the asset against the Dollar Index (DXY), Gold (GC1!), Bonds (ZB1!), and Sector ETFs.

MTF Dashboard: Includes a Multi-Timeframe table to see valuation status across Daily, Weekly, and Monthly views simultaneously.

ETF Reference: A built-in reference table to help you quickly find the correct Sector ETF for stock correlation.

How to Use

Undervalued Zone (< 15): When the line turns Green (or enters the bottom zone), the asset is historically cheap relative to the benchmark. This often indicates a potential accumulation or reversal point.

Overvalued Zone (> 85): When the line turns Red (or enters the top zone), the asset is historically expensive relative to the benchmark, suggesting potential distribution.

Divergences: Watch for divergences between the asset price and the Valuation Index (e.g., Price makes a new high, but the Valuation Index against Gold makes a lower high).

Settings

You can toggle individual benchmark lines (Asset 1 to 4).

Adjust the "Lookback Period" to change the historical normalization window.

Customize the Overbought/Oversold thresholds.