Indicators  |  MAR 1998

How Has The Stock Market Priced Itself? by Gordon W. Neal

How Has The Stock Market Priced Itself? by Gordon W. Neal Sometimes, the most puzzling of trading questions can be answered with the simplest of technical methods. Here, two such methods are combined for trading: Tushar Chande's variable indexed dynamic average (VIDYA), a moving average that automatically adjusts to the current market's volatility and is used as a trend indicator, and a classic rule of thumb from early-day trader W.D. Gann known as the 50% rule is added. Off-floor, intraday traders are faced with decisions throughout the trading day. Two of the simpler yet most perplexing questions are, first: Which way are prices trending? And second: Is the reaction occurring during a trend, part of the trend, or the end of the trend? For the answers to these questions and many more, consider W.D. Gann’s 50% rule, and a previously introduced trend monitor called the VIDYA 21,5.

by Gordon W. Neal