by Thomas E. Aspray
In my market analysis, I find the action of the open interest can be very important. Granted in the
financial futures it occasionally gives misleading signals, but these are the exception rather than the rule.
I use two indicators which incorporate the open interest, the Board Watch Trend Indicator and the
Herrick Payoff Index (HPI) developed by John Herrick. I find the HPI is an excellent short- and
long-term tool, though my use and interpretation varies from John's.
HPI is simply a mathematical method of measuring the money flowing in or out of a commodity by
computing the difference in dollar volume each day. The formula, according to the CompuTrac System
Operating Manual, is: