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I’m interested in identifying stocks that have “smooth” transitions up and
down, meaning when a stock is increasing day to day that the lows of the
previous day aren’t violated, and vice versa.
I have had excellent results using the ADX (J. Welles Wilder's Average
Directional Index). When the ADX is rising it indicates the "smoothness"
that you are looking for. This "smoothness" is a matter of directional price
movement. A market with high directional movement is "smooth." There will
always be days when the previous day's low is violated. Even very
smooth/directional markets are not perfect. The ADX allows a convenient way
of measuring and comparing the "smoothness" of markets.
I have posted many free articles about using ADX on my website. Go to
http://www.traderclub.com/discus/board.html
and click on BULLETINS.
Chuck LeBeau
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