The strength of the bulls versus bears is measured by the ability of each to push prices to extreme levels. The Balance of Market Power indicator assigns a score to each based on the following reward values:

" Reward based on open  measures the ability of each group to push opening price in opposite directions (bears down and bulls up).

" Reward based on close  measures the ability of each group to push closing price in opposite directions (bulls up from the low price and bears down from the high price).

" Reward based on open close  measures how each day finishes (up or down), the winning group gains and extra score.

Each reward is calculated to the full price movement for each day (HighPrice-LowPrice). Once each side has been calculated the daily reward is calculated for both the bulls and bears. The Balance of Market Power indicator is calculated as a difference between each sides daily rewards.

The Balance of Market Power is an oscillator and supports price divergence, trends, and overbought-oversold levels. It can also help to determine market trends. This indicator measures the velocity of the price trend and results can be less sustainable than a price trend because maintaining the same velocity of a trend is more difficult than the trend itself.

Further information on Balance of Market Power can be found in the August 2001 issue of Technical Analysis of Stocks and Commodities

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