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The STIX indicator is yet another short term oscillator that compares the volume flowing into advancing and declining stocks. STIX trading ranges generally stay between +42 and +58, meaning that the indicator does not generate signals very often. With few exceptions (such as a full scale bear market) a STIX value of 45 or less usually signals a buy. A STIX above 56 means the market is overbought, and most traders tend to sell at STIX values above 58. Although a short term oscillator, the STIX is less use in day trading methods than you might imagine, as it fires so rarely.

To calculate the STIX, you first need the Advance/Decline Ratio, generated as Advancing Issues divided by the sum of advancing and declining issues multiplied by 100. The STIX is then a 21 period EMA of the Advance Decline ratio, i.e. A/D ratio x 0.9, plus yesterday's STIX x 0.91.

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