Stocks & Commodities V. 25:10 (10-16): Letters to S&C by Technical Analysis, Inc.

Letters to S&C by Technical Analysis, Inc.

BETWEEN PRICE AND VOLUME

Editor,

I would like to thank Buff Dormeier for his wellwritten and insightful article, “Between Price And Volume” (July 2007). I have two questions for the author regarding the volume-price ratio (VPR) and normalization:

1) If the purpose of the VPR is to “accentuate the VPC+/- relative to the shortterm price-volume relationship,” it seems that the formula (VPR = VWMA/ SMA) should be flipped (VPR = SMA/ VWMA) when the closing price is below the SMA and the VWMA. As it was presented, the VPR would accentuate the VPC when the WVMA closely follows (more than the SMA) rising prices, but would actually decrease the VPC if the WVMA closely follows falling prices.