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To: Warpfactor who wrote (15244)	7/19/2002 8:01:34 AM
From: pvz	Read Replies (1) \| Respond to of 23153

Warp, good question. I've been looking at ADX for close on 2 years now, so this is a good opportunity to dig up the official definitions! From Stockcharts: ADX is an oscillator that fluctuates between 0 and 100. Even though the scale is from 0 to 100, readings above 60 are relatively rare. Low readings, below 20, indicate a weak trend and high readings, above 40, indicate a strong trend. The indicator does not grade the trend as bullish or bearish, but merely accesses the strength of the current trend. A reading above 40 can indicate a strong downtrend as well as a strong uptrend. My observations: Technical buy and sell signals occur at the crossovers of the +DI and -DI. However in the current market, I'm finding more and more that they don't confirm. So what I find more accurate, is where the lower indicator hits bottom. Normally a reading of 10 to 15 would be good but at the moment the market seems to need a reading lower than 10. I've also found you can get some residual selling afterwards, i.e. it sometimes acts as a leading indicator. Also, the position of the black ADX line is important. It usually is a good reversal indicator when it tops out above 40, but can lag the -DI by a couple of days. However, if the black ADX line is very low (<20), I wouldn't place too much reliance on the +DI and -DI components. This is illustrated in this tlab chart, which incidentally also shows how the green-red crossover is currently unreliable. Note how the black line was a good coincident signal when it topped at 40: stockcharts.com[e,a]dbclyyay[dc][pf][vc60][iut!Ll14]&pref=G Now look at the weekly $SPX. It tells me that my timing might not be 100%, but a reversal isn't far off either: stockcharts.com[e,a]wbclyyay[pf][vc60][iut!Ll14]&pref=G So, in answer to your question, it can be used for general market indicators as well as stocks, and across all time periods. Also, that's a good observation about the red line not being as high as it was at previous bottoms. I don't think ADX should be used as an absolute and needs to be confirmed by other signals as well. All I can say is that it will turn around soon. pvz

To: Warpfactor who wrote (15244)	7/19/2002 9:16:53 AM
From: chowder	Read Replies (1) \| Respond to of 23153

Warp, let me add to the explanation given by pvz, regarding the ADX indicator. You have three lines. The black line represents the trend. The +D1 line, usually a green line, represents the buyers. The -D1 line, usually a red line represents the sellers. The line that is on top has control of the trend. So, if the red line is above the green line, the trend line may be turning up, but it's indicating the sellers have control of the equity or index. You want to see the green line crossing up and over the red line. This would put the buyers back in control. In using RFMD as an example, you'll notice the red line, the sellers, had control of the trend until the trend line reached the 50 mark. This was an indication that RFMD was due to reverse. As the red line dropped lower and lower, the black trend line also dropped with it. stockcharts.com[h,a]daclyiay[pb10!b50!b200!f][vc60][iut!Ll14]&pref=G dabum