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.
BREAKING DOWN 'Mass Index'
To determine the Mass Index, first calculate the nineday 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 nineday 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.

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Why is the Mass Index important for traders and analysts?
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