The confidence index is designed to measure how willing investors are to take a chance in the market. It is the ratio of high-grade bond yields to lowgrade bond yields. This ratio is started below one. When bond investors grow more confident about the economy, they shift their holdings from highgrade to lower-grade bonds, lowering their yield relative to high-grade bonds and increasing the confidence index. In other words, the confidence ratio moves close to one. Confidence-index technicians believe that the confidence index leads the stock market by two to eleven months. An upturn in the confidence index is supposed to foretell of rising optimism and rising prices in the stock market. A fall in the confidence index represents the fact that low-grade bond yields are rising faster or falling more slowly than highgrade yields. This is supposed to reflect increasing risk aversion by institutional money managers who foresee an economic downturn and rising bankruptcies and defaults. Analysts who have examined the confidence index conclude that it conveys some information for security analysis.