Sunday, March 14, 2010

The General Liquidity Index Super Simple Oscillator

First you take the GLI...



...add a 7 day simple moving average,



...and then a 21 day simple moving average:



Next, you take the 7 day simple moving average and subtract the 21 day simple moving average, which currently looks like this:



That, Ladies and Gentleman, is how you make an oscillator, in this case a super simple one.

But wait, there's more! Because what would an oscillator be without a 'trigger' line? So let's add a 7 day simple moving average to the graph above.



You can then make a 'histogram' by subtracting the Super Simple Oscillator (SSO) by its 7 DMA:



You might be wondering why I am wasting valuable blog space on what appears to be nothing but a remedial lesson in technical analysis. Well, actually, I've come up with a new on-going feature for Trend & Value based on this very GLI SSO Histogram. I'll explain it all in the next blog post.