Mass index

The mass index is an indicator, developed by Donald Dorsey, used in technical analysis to predict trend reversals. It is based on the notion that there in a tendency for reversal when the price range widens, and therefore compares previous trading ranges (highs minus lows).

Mass index for a commodity is obtained by calculating its exponential moving average over a nine day period and the exponential moving average of this average (a "double" average), and summing the ratio of these two over a given amount of days (usually 25).

According to Donald Dorsey, a so-called "reversal bulge" is a probable signal of trend reversal (regardless of the trend's direction). Such a bulge takes place when a 25-day mass index reaches 27.0 and then falls to below 26 (or 26.5). A 9-day prive moving average is uaully used to determine whether the bulge is a buy or sell signal.