The STIX indicator
is yet another short term oscillator that compares the volume flowing
into advancing and declining stocks. STIX trading ranges generally
stay between +42 and +58, meaning that the indicator does not generate
signals very often. With few exceptions (such as a full scale bear
market) a STIX value of 45 or less usually signals a buy. A STIX
above 56 means the market is overbought, and most traders tend to
sell at STIX values above 58. Although a short term oscillator,
the STIX is less use in day trading methods than you might imagine,
as it fires so rarely.
To calculate the STIX,
you first need the Advance/Decline Ratio, generated as Advancing
Issues divided by the sum of advancing and declining issues multiplied
by 100. The STIX is then a 21 period EMA of the Advance Decline
ratio, i.e. A/D ratio x 0.9, plus yesterday's STIX x 0.91.