TFI multiples

         Use the TFI multiples question to examine the effect of increasing or decreasing TFI counts on market behavior.

Example:

         Today’s TFI is more than 1.5 times yesterday’s TFI.

Questions from Traders:

         Does a jump in the TFI signal a market that is stabilizing? How often does the market trade within the prior day’s range after a jump in the TFI?

Setting Up the Search:

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Answers:

         In general, a big jump in the TFI signals a market that is stabilizing. The type of jump in the TFI that we tested for occurs about once every twenty trading days or about once a month. On the days following a 50% (factor = 1.5) increase in the TFI, the market closes within the range of the higher TFI day the next day over 54% of the time. While this may not seem like a large percentage of the time, it is a significant increase over the normal tendency of the market to close within the prior day’s range (45%).