DEFINITION of 'STIX'
A short-term trading oscillator that compares the amount of volume flowing into advancing and declining stocks. The STIX oscillates around the 50 level, with values over 50 generated when advancers outnumber decliners, and values less than 50 resulting when advancers are less than decliners. The trading range for the STIX is generally between 42 and 58, with levels below 42 indicating extremely oversold conditions, and levels above 58 denoting extremely overbought conditions.
BREAKING DOWN 'STIX'
The STIX is calculated by taking a 21-period exponential moving average of a variation of the Advance/Decline ratio.
The formula is: STIX = (A/D Ratio x 0.09) + (Previous STIX x 0.91), where the A/D Ratio represents advancing stocks as a percentage of all stocks (advancing plus declining).
Technical traders may be inclined to buy when the STIX drops to 45 or below and sell when the STIX reaches 56 or above, unless the markets are in a state of extreme bearishness or bullishness, respectively.