Relative Strength Index
Overview
The RSI is popular indicator developed by trader Welles Wilder. The
RSI is a popular indicator that shows comparative price strength within a
single security.
Interpretation
The most widely used method for
interpreting the RSI is price / RSI divergence, support / resistance levels and
RSI chart formations.
Mass Index
Overview
The Mass Index identifies price changes by indexing the narrowing
and widening change between high and low
prices.
Interpretation
According to the inventor of the Mass Index,
reversals may occur when a 25-period Mass Index rises above 27 or falls
below 26.5.
Historical Volatility Index
Overview
Historical volatility is the log-normal standard deviation. The
Historical Volatility Index is based on the book by Don Fishback, "Odds: The
Key to 90% Winners".
The formula for a 30-day historical volatility index
between 1 and 0 is:
Stdev(Log(Close / Close Yesterday), 30) *
Sqrt(365)
Some traders use 252 instead of 365 for the bar history that is
used by the square root function. The Log value is a natural log (i.e.
Log10).
Interpretation
High values of HVI indicate that the stock is
volatile, while low values of HVI indicate that the stock is either flat
or trending steadily.
Money Flow Index
Overview
The Money Flow Index measures money flow of a security, using volume
and price for calculations.
Interpretation
Market bottoms may be
identified by values below 20 and tops may be identified by values above 80.
Divergence of price and Money Flow Index may be watched.
Chaikin Money Flow Index
Overview
The Chaikin Money Flow oscillator is a momentum indicator that spots
buying and selling by calculating price and volume together. This indicator
is based upon Accumulation / Distribution, which is in turn based upon the
premise that if a stock closes above its midpoint, (high + low) / 2, for the
day then there was accumulation that day, and if it closes below
its midpoint, then there was distribution that
day.
Interpretation
A buy signal is generated when the indicator is
rising and is in positive territory. A sell signal is generated when the
indicator is falling and is in negative territory.
Comparative Relative Strength Index
Overview
The Comparative Relative Strength index compares one vector with
another.
Interpretation
The base vector is outperforming the other
vector when the Comparative RSI is trending upwards.
Price Volume Trend
Overview
Also known as Volume Price Trend. This indicator consists of a
cumulative volume that adds or subtracts a multiple of the percentage change
in price trend and current volume, depending upon their upward or downward
movements. PVT is used to determine the balance between a stock's demand and
supply. This indicator shares similarities with the On Balance Volume
index.
Interpretation
The Price and Volume Trend index generally
precedes actual price movements. The premise is that well-informed investors
are buying when the index rises and uninformed investors are buying when the
index falls.
Positive Volume Index
Overview
The Positive Volume Index puts focus on periods when volume
increases from the previous period.
Interpretation
The interpretation
of the Positive Volume Index is that the majority of investors are buying when
the index rises, and selling when the index falls.
Negative Volume Index
Overview
The Negative Volume Index is similar to the Positive Volume Index,
except it puts focus on periods when volume decreases from the previous
period.
Interpretation
The interpretation of the Negative Volume Index
is that well-informed investors are buying when the index falls
and uninformed investors are buying when the index rises.
On Balance Volume
Overview
The On Balance Volume index shows a relationship of price and volume
in the form of a momentum index.
Interpretation
On Balance Volume
generally precedes actual price movements. The premise is that well-informed
investors are buying when the index rises and uninformed investors are
buying when the index falls.
Performance Index
Overview
The Performance indicator calculates price performance as a
normalized value or percentage.
Interpretation
A Performance indicator
shows the price of a security as a normalized value. If the Performance
indicator shows 50, then the price of the underlying security has increased
50% since the start of the Performance indicator calculations. Conversely,
if the indictor shows -50, then the price of the underlying security has
decreased 50% since the start of the Performance indicator calculations.
Trade Volume Index
Overview
The Trade Volume index shows whether a security is being accumulated
or distributed (similar to the Accumulation/Distribution index).
Interpretation
When the
indicator is rising, the security is said to be accumulating. Conversely, when
the indicator is falling, the security is said to being distributing. Prices
may reverse when the indicator converges with price.
Swing Index
Overview
The Swing Index (Wilder) is a popular indicator that shows
comparative price strength within a single security by comparing the current
open, high, low, and close prices with previous
prices.
Interpretation
The Swing Index is a component of the
Accumulation Swing Index.
Accumulative Swing Index
Overview
The Accumulation Swing Index (Wilder) is a cumulative total of the
Swing Index, which shows comparative price strength within a single security
by comparing the current open, high, low, and close prices with previous
prices.
Interpretation
The Accumulation Swing Index may be analyzed
using technical indicators, line studies, and chart patterns, as an
alternative view of price action.
Commodity Channel Index
Overview
Donald Lambert developed the CCI indicator. Although the purpose of
this indicator is to identify cyclical turns in commodities, it is often
used for stocks.
Interpretation
This indicator oscillates between an
overbought and oversold condition and works best in a sideways market.
Parabolic SAR
Overview
Author Welles Wilder developed the Parabolic SAR. This indicator is
always in the market (whenever a position is closed, an opposing position is
taken). The Parabolic SAR indicator is most often used to set trailing price
stops.
Interpretation
A stop and reversal (SAR) occurs when the price
penetrates a Parabolic SAR level.
Stochastic Momentum Index
Overview
The Stochastic Momentum Index, developed by William Blau, first
appeared in the January 1993 issue of Stocks & Commodities magazine.
This indicator plots the closeness of price relative to the midpoint of the
recent high / low range.
Interpretation
The Stochastic Momentum Index
has two components: %K (SMIK) and %D (SMID). %K is most often displayed on a
chart as a solid line and %D is often shown as a dotted line. The most
widely used method for interpreting the Stochastic Momentum Index is to buy
when either component rises above 40 or sell when either component falls below
40. Another way to interpret the Stochastic Momentum Index is to buy when %K
rises above %D, or sell when %K falls below %D.