by Arthur A. Merrill, C.M.T.
Does the degree of volatility in the stock market give us any clue to the future of the market? I tested
day-to-day volatility and found that it does have a good forecasting record.
I took the percent change of the Dow Jones Industrial Average from the preceding day's close to the
current close, and multiplied by 1,000 to get a reasonable number. All changes up or down were made
positive. The changes in the week were then averaged to make the v basic index. The chart is a 33%
exponential average, which is about the equivalent of a five-week average.