Directional Movement
StockCiphering.com calculates 14-day +DI/-DI/ADX figures for all stocks in the
database and makes use of different values for many of its stock screens.
The Directional Movement System is a method developed by J. Welles Wilder, Jr.
It identifies trends and also measures the momentum of the trend, be it up or down.
In a nutshell, there are two indicators that measure the portion of today's
range that is outside the previous day's range. The Positive Directional Indicator
(+DI) measures the force of the upward moves and the Negative Directional Indicator
(-DI) measures the force of the downward moves. These indicators are averaged and smoothed
over a period of time (14 days). When the +DI is above the -DI, it indicates that bullish
traders are stronger. Conversely, if the +DI is below the -DI, it indicates that the
bears are in control.
The Average Directional Index (ADX) measures the spread between +DI and -DI. It
can take on values ranging from 0 to 100. The higher the ADX, the stronger the
trend. Very low ADX values indicate general directionless movement.
Please visit StockCharts.com for more in-depth discussions on
+DI,
-DI, and
ADX.
But what StockCharts.com and other sites do not discuss in detail are the
extreme highs and lows of ADX Values. We do make use of those to find
potential breakout stocks (low ADX) and reversals (high ADX).
Read more on ADX Values...
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