Mass Index

AAA

DEFINITION of 'Mass Index'

A form of technical analysis that examines the range between high and low stock prices over a period of time. The Mass Index, developed by Donald Dorsey in the early 1990s, suggests that a reversal of the current trend will likely take place when the range widens beyond a certain point and then contracts. 

INVESTOPEDIA EXPLAINS 'Mass Index'

To determine the Mass Index, first calculate the nine-day exponential moving average (EMA) of the range between the high and low prices for a period of time – typically 25 days. Then divide this figure by the nine-day exponential moving average of the moving average in the numerator. The equation looks like this:

 

 

Dorsey hypothesized that, when the figure jumps above 27 – creating a “bulge” – and then drops below 26.5, the stock is ready to change course. An index of 27 represents a rather volatile stock, so some traders set a lower baseline when determining the presence of a price bulge.

RELATED TERMS
  1. Money Flow Index - MFI

    A momentum indicator that uses a stock’s price and volume to ...
  2. On-Balance Volume (OBV)

    A momentum indicator that uses volume flow to predict changes ...
  3. Negative Volume Index - NVI

    A technical indicator that relies on changes in a security’s ...
  4. Accumulation/Distribution

    An indicator that tracks the relationship between volume and ...
  5. Force Index

    The Force Index is an oscillator that fluctuates above and below ...
  6. Vortex Indicator - VI

    An oscillator composed of two lines--an uptrend line (VI+) and ...
Related Articles
  1. Using Compound Indicators To Predict ...
    Trading Strategies

    Using Compound Indicators To Predict ...

  2. Using Trading Indicators Effectively
    Active Trading

    Using Trading Indicators Effectively

  3. The Four Most Commonly-Used Indicators ...
    Technical Indicators

    The Four Most Commonly-Used Indicators ...

  4. Forex Market Sentiment Indicators
    Forex Education

    Forex Market Sentiment Indicators

Hot Definitions
  1. Halloween Strategy

    An investment technique in which an investor sells stocks before May 1 and refrains from reinvesting in the stock market ...
  2. Halloween Massacre

    Canada's decision to tax all income trusts domiciled in Canada. In October 2006, Canada's minister of finance, Jim Flaherty, ...
  3. Zombies

    Companies that continue to operate even though they are insolvent or near bankruptcy. Zombies often become casualties to ...
  4. Witching Hour

    The last hour of stock trading between 3pm (when the bond market closes) and 4pm EST. Witching hour is typically controlled ...
  5. October Effect

    The theory that stocks tend to decline during the month of October. The October effect is considered mainly to be a psychological ...
  6. Repurchase Agreement - Repo

    A form of short-term borrowing for dealers in government securities.
Trading Center