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> > There was an overbought/oversold indicator described in the June
> > 2000 Futures Magazine called the Psychological Index. It looked
> > sort of interesting, so I wrote the MetaStock code for it:
> >
> > {Futures Magazine, Vol.29 No.6, June 2000, P.48}
> > LookBack:= Input("Number of lookback periods", 2, 100, 12);
> > UThreshold:= Input("Upper threshold (%)", 0, 100, 75);
> > LThreshold:= Input("Lower threshold (%)", 0, 100, 25);
> > UpDay:= If(CLOSE > Ref(CLOSE,-1), 1, 0);
> > PsychIndex:= Sum(UpDay,LookBack) / LookBack * 100;
> > PsychIndex; UThreshold; LThreshold
>
> Am I reading this right? This looks like no more than the % of days
> in the past "N" periods that have closed up.
Yup. Rocket science it ain't, but it does tend to highlight overbought
and oversold conditions. And like most overbought/oversold indicators,
they're unreliable as stand-alone systems.
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