Eric,
I'm not real familiar with either indicator, but the stock analysis program I have says this about the Chaikin Money Flow Indicator:
"Chaikin Money Flow Indicator
Appeared in the January 94 issue of Stocks & Commodities magazine
Like the popular Chaikin A/D Oscillator developed by Marc Chaikin,
the Chaikin Money Flow indicator is based on the Accumulation/Distribution line.
It is created by summing the values of the Accumulation/Distribution Line for 21 periods
and then dividing by a 21 period sum of the volume.
The interpretation of the Chaikin Money Flow indicator is based on the assumption that market strength
is usually accompanied by prices closing in the upper half of their daily range with increasing volume.
Likewise, market weakness is usually accompanied by prices closing in the lower half of their daily range with increasing volume.
If prices consistently close in the upper half of their daily high/low range on increased volume,
then the indicator will be positive (i.e., above the zero line). This indicates that the market is strong.
Conversely, if prices consistently close in the lower half of their daily high/low range on increased volume,
then the indicator will be negative (i.e., below the zero line). This indicates that the market is weak.
The Chaikin Money Flow indicator provides excellent confirmation signals of trendline and support/resistance breakouts.
For example, if a security's prices have recently penetrated a downward sloping trendline (signaling a potential trend reversal),
you may want to wait for further confirmation by allowing the Chaikin Money Flow indicator to cross above the zero line.
This may indicate an overall shift from a downtrend to a new uptrend.
A divergence between the Chaikin Money Flow indicator and prices are also significant.
For example, if the most recent peak of the indicator is lower than it's prior peak,
yet prices are continuing upward, this may indicate weakness."
The formula presented for this calculation is:`
Graph0 = Sum(((( C-L )-( H-C )) / ( H-L ))*V, 21 ) / Sum(V,21);
where C=close, H=high, L=low and V= volume
I dont have the formula for the accumulation/distribution formula.....the concept seems to make sense. What is the accum/distr based on? It'd be interesting to see the difference in the signals between the clx and the 'chaikin clx'. Do you assign a value of +1 to a stock that crosses the zero in an upward direction and a -1 to one that crosses heading down? Thanks for the idea?
mOOrso |
