by James S. Gould, Ph.D.
ELLI-VOL II is a trading/timing method combining a stock's (or index's) daily closing price and
trading volume to derive a daily trading signal, presumably indicating when to open or close a current
position or to stay out of the market.
The program's underlying logic is based on the amount of volume required to "move" a stock's price. In
theory, a half-point price move on 8,000 shares is less significant than a similar price move on 15,000
shares because price-volume relationships portend accumulation/distribution activity. Additionally, an
increase (decrease) in price accompanied by high volume is bullish (bearish) while a price increase or
decrease accompanied by low volume is not as important. Most traders would agree, however, that these
relationships are not always true (especially at "critical" points in a price move) and that there is more to
successful trading than these price-volume relationships.