Doc's Kinetic Energy
Originally conceived as a market speedometer, Kinetic Energy (KE) evolved into a measure of how much participation is driving price movement. Inspired by the classical physics equation:
KE = ½mv²
where volume acts as mass (m) and price velocity (v) is calculated from the rate of price displacement over a fixed lookback period. The resulting KE value is a directionless measure of market activity that increases when both participation and movement are strong.
The companion Power calculation measures the change in Kinetic Energy over time:
Power = ΔKE
helping identify whether market activity is expanding or contracting. Together, KE and Power answer two simple questions:
How much is happening? and Is it increasing or decreasing?
Both KE and Power are expressed as percentiles, making interpretation straightforward:
Above 80: High energy or unusually active market conditions.
Below 20: Low energy or dormant market conditions.
Rising Power: Market activity is accelerating.
Falling Power: Market activity is decelerating.
KE is intentionally directionless and is best used alongside a directional indicator to distinguish between active, committed market moves and low-energy price action.
KE = ½mv²
where volume acts as mass (m) and price velocity (v) is calculated from the rate of price displacement over a fixed lookback period. The resulting KE value is a directionless measure of market activity that increases when both participation and movement are strong.
The companion Power calculation measures the change in Kinetic Energy over time:
Power = ΔKE
helping identify whether market activity is expanding or contracting. Together, KE and Power answer two simple questions:
How much is happening? and Is it increasing or decreasing?
Both KE and Power are expressed as percentiles, making interpretation straightforward:
Above 80: High energy or unusually active market conditions.
Below 20: Low energy or dormant market conditions.
Rising Power: Market activity is accelerating.
Falling Power: Market activity is decelerating.
KE is intentionally directionless and is best used alongside a directional indicator to distinguish between active, committed market moves and low-energy price action.
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