Upside/Downside Ratio Indicator
Upside/Downside ratio or UpDown is a very useful indicator for finding long-term trends, and overbought and oversold levels. This is a simple indicator which is created by dividing the volume of total advancing stocks of NYSE by volume of total declining stocks of NYSE. For displaying long-term trends, the upside/downside ratio is represented as a moving average.
The value of daily UpDown is above 1 when the total volume of advancing stocks is higher than declining stocks (uptrend) and the value is below 1 when total volume of advancing stocks is lower than declining stocks. Extreme high values of upside/downside ratio indicate that the market is becoming overbought and extreme low values indicate that the market is becoming oversold.
Many traders use the ratio to calculate the potential return of a stock on potential loss. They determine a target price based on fundamental analysis and test that against UpDown indicator. Generally the UpDown range is divided into 3 ranges, the lower 25% good-to-buy range because the price has more chance to increase than decrease, upper 25% good-to-short range because the price has more chance to decrease than increase and a middle 50% range.
'Multiple 9-to-1 days' is a feature to look for with upside/downside ratio indicator. Two or more days with ratio above 9 within a three month period is a good sign of the start of a strong bullish trend.
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UpDown = Advancing Volume / Declining Volume
The value of daily UpDown is above 1 when the total volume of advancing stocks is higher than declining stocks (uptrend) and the value is below 1 when total volume of advancing stocks is lower than declining stocks. Extreme high values of upside/downside ratio indicate that the market is becoming overbought and extreme low values indicate that the market is becoming oversold.
Many traders use the ratio to calculate the potential return of a stock on potential loss. They determine a target price based on fundamental analysis and test that against UpDown indicator. Generally the UpDown range is divided into 3 ranges, the lower 25% good-to-buy range because the price has more chance to increase than decrease, upper 25% good-to-short range because the price has more chance to decrease than increase and a middle 50% range.
'Multiple 9-to-1 days' is a feature to look for with upside/downside ratio indicator. Two or more days with ratio above 9 within a three month period is a good sign of the start of a strong bullish trend.
NobleTrading.com Offers Online Stock Trading, Online Options Trading
Online Futures Trading, Online Forex Trading
Worldwide Brokerage Service, Day Trading Brokerage
posted by NobleTrading at
8:38 AM
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