Education / Indicators / S T I X
STIX is a short-term trading oscillator that was published in The Polymetric Report. It compares the amount of volume flowing into advancing and declining stocks. The STIX function determines the momentum of the market by calculating an exponential moving average of the ratio of advancing issues to declining issues.
- STIX usually ranges between +42 and +58.
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If STIX gets as low as 45, the market is almost always a buy, except in a raging bear market.
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The market is fairly overbought if STIX rises to 56; and except in a new bull market, it's wise to sell if STIX should go over 58.
- Traders and investors should modify these rough rules to suit their own objectives.
- In normal markets, STIX rarely gets as high as 56 or as low as 45, so rigid use of these rules of thumb would keep you inactive most of the time. For active accounts, the rules might be made much less stringent.
Calculation
The STIX indicator is calculated using a variation of Advance/Decline Ratio. The number of advancing issues is divided by the sum of the number of advancing and declining issues and multiplied by 100. This provides a relative percent of stocks which are advancing, not including unchanged issues. A 21-period exponential moving average is then taken for this value. The resultant value typical oscillates around 50.Since the STIX uses an exponential moving average, it will have values at the beginning of the data series. However, you may want to ignore values before the initial 21-day period.
The STIX is a 21-period (i.e., 9%) exponential moving average of the above A/D Ratio:
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