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. Playing Penny Stock-Like ETFs
    Stock Analysis

    Playing Penny Stock-Like ETFs

  2. Hypothesis Testing in Finance: Concept ...
    Active Trading Fundamentals

    Hypothesis Testing in Finance: Concept ...

  3. What You Need To Know About COBRA Health ...
    Insurance

    What You Need To Know About COBRA Health ...

  4. Technical Top-Down Investing: Analyzing ...
    Retirement

    Technical Top-Down Investing: Analyzing ...

comments powered by Disqus
Hot Definitions
  1. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  2. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  3. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  4. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
  5. Gresham's Law

    A monetary principle stating that "bad money drives out good." In currency valuation, Gresham's Law states that if a new ...
  6. Limit-On-Open Order - LOO

    A type of limit order to buy or sell shares at the market open if the market price meets the limit condition. This type of ...
Trading Center