Bill Blau's formulas

["Walter Lake" <wlake@xxxxxxxxx>]

Hi Ton

Thanks for the package of emails re True Strength Index. I'll go through Mr.
Blau's book "Momentum, Direction, and Divergence" and post the formulas page
by page from the book. Maybe you or others on the bulletin board could
re-post them with the Metastock equivalents.

Chapter 2 - page 3+

True Strength Index = TSI

TSI(close,r,s) = 100*EMA(EMA(mtm,r),s / EMA(EMA(ImtmI,r),s)

Numerator
mtm = one-day momentum of close
r-day EMA of mtm {25 day}
s-day EMA {13 day double smoothing}

Demoninator
ImtmI = absolute value of mtm
r-day EMA of ImtmI
s-day EMA {double smoothing}

TSI(close,25,13)
Signal Line = EMA(TSI,7)
thresholds at +25, 0, -25

- 0 -

5 day EMA of 20 day EMA of 1 day momentum {little lag Vs smoothing of price}

- 0 -

Ergodic Oscillator = Ergodic + Signal line {TSI version of Slow Stochastic}

Erodic(close,r) = TSI(close,r,5)  {double smoothing is fixed at 5}

Signal Line(close,r) = EMA(TSI(close,r,5),5)

r = 20days

thresholds are +20, -20

interesting comparision chart between 20 Slow Stochastic and 20 Erodic
{more head room in oversold-bought aeas}

another chart showing Ergodic Osc = TSI(close,32,5) with 5-day EMA signal
line

- 0 -

Trading Ergodics with the Trend - Rules

1. Enter or hold position only when slope of Erogodic Signal line has the
same direction as the trend

2. Stand aside when slope of Erogodic Signal Line is in the opposite
diretion of trend

3. Enter or exit position when Erogodic and its Signal Line cross


- 0 -

Slow TSI Trend = TSI(close,64,64) {? weekly looking chart - very little lag}
Thresholds set at +15 & -15

Trading Ergodics with Slow TSI Trend
1st window - Slow TSI Trend = TSI(close,64,64)
2nd window - Ergodic Osc = TSI(close,64,5)

end chapter 2

let me know if you need further explanations

will sent Chapter 3 - Stochastic Momentum later

Best regards

Walter