The Absolute Breadth Index (ABI) the absolute value of the difference between the number of advancing issues and the number of declining issues. The values are always positive. Higher values indicate higher market volatility, that is, a greater spread between the advances and declines.

The Accumulation/Distribution Line is similar to the On Balance Volume (OBV), which sums the volume times +1/-1 based on whether the close is higher than the previous close. The Accumulation/Distribution indicator, however multiplies the volume by the close location value (CLV). The CLV is based on the movement of the issue within a single bar and can be +1, -1 or zero.

The Accumulation/Distribution Line is interpreted by looking for a divergence in the direction of the indicator relative to price. If the Accumulation/Distribution Line is trending upward it indicates that the price may follow. Also, if the Accumulation/Distribution Line becomes flat while the price is still rising (or falling) then it signals an impending flattening of the price.

The Accumulation/Distribution Line was developed by Marc Chaikin.

The Accumulation/Distribution Line should not be confused with the Williams price Accumulation/Distribution indicator.

This indicator can help confirm a trend. See the lines drawn below and how the correspond to the price action.

The Advance/Decline Line is the most popular advance/decline indicator. It is a cumulative total of the Advancing-Declining Issues indicator. The Advance/Decline Line of a market (such as the NYSE or NASDAQ) moves with the price of the market index. Look for agreement/divergence to confirm/deny price trends.

If you have a stock trading in the general direction of the market, this can give you the very short term probable direction to take. It is charted on a daily chart but is so short term in nature that would be best traded upon only intra day.

The Advance/Decline Ratio is the ratio of the number of advancing issues to the number of declining issues. The values can be read easily. For instance, a value of two means that there were twice as many advancing issues as declining issues. Numbers below one mean that there were more declining issues than advancing issues. For instance, a value of 0.5 means that there were half as many advancing issues as declining issues. The A/D Ratio is often smoothed with a moving average.

The word aroon is Sanskrit for "dawn's early light." The Aroon indicator attempts to show when a new trend is dawning. The indicator consists of two lines (Up and Down) that measure how long it has been since the highest high/lowest low has occurred within an n period range.

When the Aroon Up is staying between 70 and 100 then it indicates an upward trend. When the Aroon Down is staying between 70 and 100 then it indicates a downward trend. A strong upward trend is indicated when the Aroon Up is above 70 while the Aroon Down is below 30. Likewise, a strong downward trend is indicated when the Aroon Down is above 70 while the Aroon Up is below 30. Also look for crossovers. When the Aroon Down crosses above the Aroon Up, it indicates a weakening of the upward trend (and vice versa).

The Aroon indicator was developed by Tushar S. Chande and first described in the September 1995 issue of Technical Analysis of Stocks & Commodities magazine.

The Aroon Oscillator is calculated by subtracting the Aroon Down from the Aroon Up. The resultant number will oscillate between 100 and -100. The Aroon Oscillator will be high when the Aroon Up is high and the Aroon Down is low, indicating a strong upward trend. The Aroon Oscillator will be low when the Aroon Down is high and the Aroon Up is low, indicating a strong downward trend. When the Up and Down are approximately equal, the Aroon Oscillator will hover around zero, indicating a weak trend or consolidation. See the Aroon indicator for more information.

The Aroon indicator was developed by Tushar S. Chande and first described in the September 1995 issue of Technical Analysis of Stocks & Commodities magazine.

The Accumulation Swing Index is a running total of the Swing Index. The Swing Index is calculated using only the two most recent bars, by summing it, the Accumulation Swing Index shows long-term trends. It will be positive in a long-term up trend, negative in a long-term down trend and it will hover around zero if the market is flat. The shape of the Accumulation Swing Index line closely matches the shape of the price line. It can be interpreted by comparing it to the price and looking for divergence or confirmation.

The Accumulation Swing Index was developed by J. Welles Wilder and is described in his 1978 book New Concepts In Technical Trading Systems.

The Bollinger Band Width indicator is the distance between the upper and lower Bollinger Bands. It is a measure of volatility. The Band Width value is higher when volatility is high and lower when volatility is low. High Band Width values indicate that the current trend may be about to end. Low Band Width values indicate that a new trend may be about to start.

See also Bollinger Bands.

Bollinger Bands were developed by John Bollinger.

The Breadth Thrust indicator is a ten period simple moving average of the Advance/Decline Line Breadth. A Breadth Thrust formation is defined as when the Breadth Thrust indicator moves from below 40% to above 61.5 percent within a ten day period. This indicates that the market is rapidly moving from an oversold condition to a strong up trend. A Breadth Thrust formations are rare and are a very good indicator of a bull market.

The Breadth Thrust indicator was developed by Dr. Martin Zweig.

The CCI is designed to detect beginning and ending market trends. The range of 100 to -100 is the normal trading range. CCI values outside of this range indicate overbought or oversold conditions. You can also look for price divergence in the CCI. If the price is making new highs, and the CCI is not, then a price correction is likely.

The Commodity Channel Index was developed by Donald Lambert and is described in his article in the October 1980 issue of Commodities magazine (now called Futures).

The Chaikin Money Flow compares the total volume over the last n time periods to the total of volume times the Closing Location Value (CLV) over the last n time periods. The CLV calculates where the issue closes within its trading range.

When the Chaikin Money Flow is above 0.25 it is a bullish signal, when it is below -0.25, it is a bearish signal. If the Chaikin Money Flow remains below zero while the price is rising, it indicates a probable reversal.

The Chaikin Money Flow indicator was developed by Marc Chaikin.





The red area above shows a negative pull on the stock. The green area shows a positive bias to the stock. If the price goes higher and the CMF diverges, it could mean the move may be coming to an end. The reverse is true for bottoming trends also.

The Detrended Price Oscillator removes the trend in prices by subtracting a moving average of the price from the price. The Detrended Price shows cycles and overbought/oversold conditions. Note that the calculation shifts the results (shift = term / 2 + 1) periods, so the last shift periods will be zero.

The Exponential Moving Average is a staple of technical analysis and is used in countless technical indicators. In a Simple Moving Average, each value in the time period carries equal weight, and values outside of the time period are not included in the average. However, the Exponential Moving Average is a cumulative calculation, including all data. Past values have a diminishing contribution to the average, while more recent values have a greater contribution. This method allows the moving average to be more responsive to changes in the data.

See also Least Squares MA, Simple MA, Triangular MA, Weighted MA, Welles MA, Variable MA, Volume Adjusted MA, Zero Lag Exponential MA, DEMA, TEMA and T3.

The MA Envelope function creates high and low bands around a moving average.

The EMV emphasizes days in which the stock is moving easily and minimizes the days in which the stock is finding it difficult to move. This indicator is used frequently with equivolume charts to identify market formations. A buy signal is generated when the EMV crosses above zero, a sell signal when it crosses below zero. When the EMV hovers around zero, then there are small price movements and/or high volume, which is to say, the price is not moving easily.

The volume is divided by a volume increment (typically 10,000) to make the resultant numbers larger and easier to work with. The EMV is usually smoothed with a moving average.

The Arms Ease of Movement indicator was developed by Richard W. Arms, Jr. See also Arms Index.

A volatility based 'envelope' indicator that measures the movement of stocks in relation to an upper and lower moving-average band.

This indicator, named after Chester W. Keltner, is used by sophisticated investors to predict the trend of the market. An overbuy occurs when prices move above the upper band, and an oversell occurs when prices move below the lower band.

A statistical measure that attempts to determine the strength of the relationship between one dependent variable (usually denoted by Y) and a series of other changing variables (known as independent variables). The two basic types of regression are linear regression and multiple regression. Linear regression uses one independent variable to explain and/or predict the outcome of Y, while multiple regression uses two or more independent variables to predict the outcome. The general form of each type of regression is:

Linear Regression: Y = a + bX + u

Multiple Regression: Y = a + b1X1 + b2X2 + B3X3 + ... + BtXt + u

Where Y is the variable that we are trying to predict, X is the variable that we are using to predict Y, a is the intercept, b is the slope, and u is the regression residual. In multiple regression the separate variables are differentiated by using subscripted numbers.

Regression takes a group of random variables, thought to be predicting Y, and tries to find a mathematical relationship between them. This relationship is typically in the form of a straight line (linear regression) that best approximates all the individual data points. Regression is often used to determine how many specific factors such as the price of a commodity, interest rates, particular industries or sectors influence the price movement of an asset.

The Mass Index is a moving sum of a 9 period Exponential Moving Average of the trading range (high minus low) divided by the double smoothed moving average of the range. The Mass Index is intended to identify trend reversals. Higher Mass Index values are created by widening trading ranges, which indicate a trend reversal.

The MASS Index was developed by Donald Dorsey and was presented in his article in the June, 1992 issue of Technical Analysis of Stocks & Commodities magazine.

McClellan Oscillator is the difference between two exponential moving averages of the advance decline spread. The time periods are typically 19 and 39 days. The values of the indicator oscillate around zero, and generally range from -100 to +100. Overbought/oversold conditions are found above +70 and below -70. Values above +100 or below -100 indicate the continuation of the current trend. Buy/sell signals are generated by zero line crossovers.

McClellan Oscillator and McClellan Summation were developed by Sherman and Marian McClellan.

The Momentum is a measurement of the acceleration and deceleration of prices. It indicates if prices are increasing at an increasing rate or decreasing at a decreasing rate. The Momentum function can be applied to the price, or to any other data series.

Negative Volume Index (NVI) attempts to identify bull markets by showing what the smart investors are doing. It is based on the assumption smart investors dominate trading on light volume days and uninformed investors dominates trading on active days. The NVI changes on days when the volume is down and stays flat on up volume days. Look for the NVI to rise above its one year moving average to signal a bull market.

Also see the Positive Volume Index.

The Negative and Positive Volume Index were developed by Norman Fosback and are described in his 1976 book, Stock Market Logic.

The Performance indicator displays the percentage difference between the price today and the price at the start of the data series. It is also known as a normalized price. It can be useful for comparing the performance of two securities or a security and an index.

The Price Oscillator shows the difference between two moving averages. It is basically a MACD, but the Price Oscillator can use any time periods. A buy signal is generate when the Price Oscillator rises above zero and a sell signal when the it falls below zero.

See also Price Oscillator Percent, MACD.

The Positive Volume Index (PVI) attempts to identify bull markets. The PVI shows what the uninformed investors are doing, while the Negative Volume Index shows what the smart investors are doing. It is based on the assumption smart investors dominate trading on light volume days and uninformed investors dominates trading on active days. The PVI changes on days when the volume is up and stays flat on down volume days.

Also see the Negative Volume Index.

The Positive and Negative Volume Index were developed by Norman Fosback and are described in his 1976 book, Stock Market Logic.

The Percentage Volume Oscillator (PVO) is the percentage difference between two moving averages of volume. The PVO has a maximum of 100, but no minimum value.

PVO crosses over zero when the fast EMA is greater than the slow EMA indicating that volume is above average. The PVO crosses below zero when the fast EMA is less than the slow EMA indicating that volume is below average. The direction of the PVO curve indicates rising or falling volume levels. Look for strong volume (rising PVO) to confirm price trends. A moving average of the PVO can be used as a signal line to indicate longer term movements and to look for crossovers.

The Price Volume Trend (PVT) is similar to the On Balance Volume (OBV). The OBV is a cumulative total of volume times +1/-1 based on whether the close is greater or less than the previous close. However, the PVT is a cumulative total of volume times the percentage change of the close from the previous close. So, it adds more of the volume to the total when the price makes greater moves. The PVT is interpreted in the same ways as the OBV.

See also On Balance Volume.

The Rate of Change function measures rate of change relative to previous periods. The function is used to determine how rapidly the data is changing. The factor is usually 100, and is used merely to make the numbers easier to interpret or graph. The function can be used to measure the Rate of Change of any data series, such as price or another indicator. When used with the price, it is referred to as the Price Rate Of Change, or PROC.

The Swing Index attempts to determine the real price. The numbers range from -100 to +100. It is difficult to interpret in its raw form, and is usually summed to form the Accumulation Swing Index.

It is important to use the correct limit move for the commodity you are analyzing (e.g. $3.00 for T-Bonds, $0.04 for Heating Oil, etc). For a stock, limit move should be a large number, such as $10,000.

The Swing Index was developed by J. Welles Wilder and is described in his 1978 book New Concepts In Technical Trading Systems.

The STIX (an acronym of Short Term IndeX) is a short-term market momentum indicator. It is calculated by taking a 21 period exponential moving average of the Advance/Decline ratio. Values over 50 are generated when there are more advancing than declining issues, values under 50 mean more decliners. Values over 56 are considered overbought and values over 58 are extremely overbought. Values under 45 are considered oversold and values under 42 are extremely oversold.

Stochastic RSI (StochRSI) is an indicator of an indicator. It calculates the RSI relative to its range in order to increase the sensitivity of the standard RSI. The values of the StochRSI are from zero to one.

The Stochastic RSI can be interpreted several ways. Overbought/oversold conditions are indicated when the StochRSI crosses above .20 / below .80. A buy signal is generated when the StochRSI moves from oversold to above the midpoint (.50). A sell signal is generated when the StochRSI moves from overbought to below the midpoint. Also look for divergence with the price to indicate the end of a trend.

See also Stochastic, Stochastic Oscillator and RSI.

The Stochastic RSI was developed by Tushar S. Chande and Stanley Kroll and is described in their 1994 book, The New Technical Trader.

The TRIX indicator calculates the rate of change of a triple exponential moving average. The values oscillate around zero. Buy/sell signals are generated when the TRIX crosses above/below zero. A (typically) 9 period exponential moving average of the TRIX can be used as a signal line. A buy/sell signals are generated when the TRIX crosses above/below the signal line and is also above/below zero.

The TRIX was developed by Jack K. Hutson, publisher of Technical Analysis of Stocks & Commodities magazine, and was introduced in Volume 1, Number 5 of that magazine.

The Ultimate Oscillator is the weighted sum of three oscillators of different time periods. The typical time periods are 7, 14 and 28. The values of the Ultimate Oscillator range from zero to 100. Values over 70 indicate overbought conditions, and values under 30 indicate oversold conditions. Also look for agreement/divergence with the price to confirm a trend or signal the end of a trend.

The Ultimate Oscillator was developed by Larry Williams and was introduced in his article in the April, 1985 issue of Technical Analysis of Stocks & Commodities magazine.

The Vertical Horizontal Filter (VHF) determines whether prices are trending. When the VHF is rising, it indicates the formation of a trend. Higher VHF values indicate a stronger trend. When the VHF is falling, it indicates the trend is ending and price is becoming congested. Very low VHF values indicate a trend may follow.

The Vertical Horizontal Filter was developed by Adam White.

The Chaikin Volatility indicator is the rate of change of the trading range. The indicator defines volatility as a increasing of the difference between the high and low. A rapid increases in the Chaikin Volatility indicate that a bottom is approaching. A slow decrease in the Chaikin Volatility indicates that a top is approaching.

The Chaikin Volatility indicator was developed by Marc Chaikin.

The Volume Weighted Moving Average is a weighted moving average that uses the volume as the weighting factor, so that higher volume days have more weight. It is a non-cumulative moving average, in that only data within the time period is used in the calculation.

See also Exponential MA, Least Squares MA, Simple MA, Triangular MA, Weighted MA, Welles MA, Variable MA, Zero Lag Exponential MA, DEMA, TEMA and T3.

Williams Accumulation/Distribution indicator measures market pressure. Look for divergence with price. When the price makes a new low, but the AD does not, look for the price to turn up, and vice versa.

The Williams Accumulation/Distribution Indicator is also known as the Williams AD. It was developed by Larry Williams.

The Williams %R is similar to an unsmoothed Stochastic %K. The values range from zero to 100, and are charted on an inverted scale, that is, with zero at the top and 100 at the bottom. Values below 20 indicate an overbought condition and a sell signal is generated when it crosses the 20 line. Values over 80 indicate an oversold condition and a buy signal is generated when it crosses the 80 line.

The %R indicator was developed by Larry Williams.

The Zig Zag filters out small movements in price to highlight trends. It looks for price moves greater than the threshold level and plots straight lines between those points. The Zig Zag is more of a visual tool than an indicator. It is non-predictive; in fact, the formula looks forward in time to find the zig zag points. The purpose of the Zig Zag is to make chart patterns clearer.