Psychological Index: A Period-Based Overbought and Oversold Indicator

Summary

The document introduces the Psychological Index as an overbought and oversold indicator, noting that it was described in Futures Magazine in June 2000. Its calculation starts by marking each period as an up day when the close is higher than the preceding close, and as not an up day otherwise. The only stated input is the calculation period, which controls the span used by the indicator.

The material gives no complete formula for turning the up-day sequence into an indicator value, nor does it explain thresholds, trading rules, performance evidence, or asset-specific behavior. It therefore conveys the basic input and daily classification but is insufficient to reproduce or evaluate the indicator from the text alone. Traders would need a full specification and independent testing before using it to identify overbought or oversold conditions.

Key ideas

• The Psychological Index is presented as an overbought and oversold indicator.
• It classifies a period as an up day when its close exceeds the previous close.
• The calculation period is the sole stated input parameter.
• The document omits the full calculation formula and any performance evidence.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.