P-Indicator

Some people contacted me after the market close about my call yesterday regarding short-term weakness based on a signal from the p-indicator. They also asked me how this indicator is different from other known indicators and what makes it so successful.

Here is my tweet yesterday before market open and although Dow futures were up:

The p-indicator is now used by a number of fund managers and plays an important role in daily decisions about increasing or decreasing risk. For example, if the p-indicator points to a reversal, traders may wait to add to positions at lower prices. Some may even buy ITM puts to take advantage of the signal. There are many strategies one can employ.

Although many new features were added to this indicator since the time I wrote it, the basic theory of the p-indicator is given in this article. A more recent article with an example can be found here. A demo of the software that includes the p-indicator is available here.

Note that the p-indicator also generates false signals, something that is true for all indicators. Experience helps in interpreting correctly the values and patterns of most technical analysis indicators, including the p-indicator.

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