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Strategies & Market Trends : MDA - Market Direction Analysis
SPY 680.28-0.5%Dec 1 4:00 PM EST

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To: James F. Hopkins who wrote (23761)8/25/1999 8:10:00 AM
From: Matthew L. Jones  Read Replies (1) of 99985
 
James,

I have been studying your DVI quite a bit. I like the concept. I have a couple of questions, however.

1) How do you keep from having a single issue (like MSFT yesterday) totally skew your average? For example yesterday's NAZ action was reported to be between 30-50% MSFT alone. How much more would it effect a smaller basket?

2) Doesn't multiplying closing price times volume assume an overly high price in uptrends and overly low price in downtrends? Or do you use average price, or what?

3) How do you adjust for the "trading factor". What I mean by this is the short term in and outs intra day, just pushing the trend? When I used to day trade, I would often jump on a freight train even when I knew full well that a reversal was coming, just to pick up a point. It would seem to me that the day trading favorites (internets, DELL, MSFT, etc).

I hope that these are not stupid questions. I think you are on to something here. Particularly if it gives us one more tool that helps us get an early warning. Thanks for your help.

Matt
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