Natural Market Slope from Weighted Regression Slopes
Summary
Natural market slope is presented as an indicator that combines linear regression slopes calculated over multiple periods. The component slopes are weighted by coefficients and combined into one measure intended to summarize the market's directional movement. The source attributes the indicator concept to Jim Sloman and its coding to Pat Raffalovich, and points readers to Sloman's book for further detail.
Prices may be smoothed before calculating the slopes with a triple exponential moving average (TEMA). The document says this preprocessing can add little lag with the suggested defaults, though it provides no parameter values, test results, or comparison supporting that claim. It describes two possible readings: a change in the indicator's color can signal a change in momentum, while a crossing of zero can indicate a change in trend. These are general interpretation guidelines for a slope or momentum indicator, not a complete trading system; the text specifies no entry, exit, sizing, or risk rules.
Key ideas
- The indicator combines regression slopes from multiple periods into a single market slope using weights.
- Prices can be smoothed with TEMA before calculating the slopes.
- A color change is presented as a possible momentum-change signal.
- A zero crossing is presented as a possible trend-change signal.
- The document provides no parameter details or empirical evidence for the indicator's performance.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.