Skip to main content
Track Stochastic oscillator
31 / 42
Search the archiveLibrary
Library

2011issue C0234-41

Build a Spearman rank oscillator from ordered closes

A spearman-indicator is rank-correlation applied to ordered closing-price windows and scaled from -100 to +100. Built that way, it measures trend strength and turning points against a fast-stochastic baseline instead of treating every oscillator as interchangeable.

  • Replace each equal-length series with ranks from lowest to highest, then compute rank-correlation to obtain a coefficient that ranges from -1 to +1.
  • On consecutive closing-price windows of length N, scale that coefficient into a spearman-indicator from -100 to +100 and read it as a direct measure of trend strength.
  • Treat a weakening cross of a short moving average as a turning-point cue, give more weight to monthly-scale crosses in the extreme-band, and use the zero-level-filter as a long-versus-short entry screen.
  • On the same sample window the spearman-indicator and fast-stochastic %K share the trend-and-turning-point role, with the rank series the smoother of the two.
Entries in this reading1 entry
Current trackStochastic oscillator170 readings

A named rank oscillator

A spearman-indicator is a rank-correlation oscillator, scaled from -100 to +100, that measures how closely a window of closing prices matches a strict time-ordered ranking. The construction starts from ordered closes so trend strength and turning points can be judged against a familiar baseline, rather than treating every oscillator as interchangeable.

Rank-correlation is a comparison of two equal-length sequences after each value is replaced by its order position rather than its raw magnitude. The constructed oscillator is Spearman rank correlation applied to two equal-length series, after each series is replaced by ranks from lowest to highest.

Compute the coefficient and scale it

The rank-correlation coefficient is computed as one minus six times the sum of squared rank differences, divided by n times n squared minus one, and ranges from -1 to +1.

When the same construction is built on consecutive closing-price windows of length N, the indicator is scaled as an oscillator from -100 to +100 and is presented as a direct measure of trend strength.

Turning points, bands, and the midline

Price turning points are read when the oscillator weakens and crosses a short moving average. Major reversals on monthly charts are tied to those crossings in the extreme-band, the outer zones above +80 and below -80.

The zero line is used as a zero-level-filter, a long-versus-short entry filter. The oscillator is also read for divergences versus price.

Compare it with fast-stochastic

On the same sample window, the spearman-indicator and fast-stochastic %K are shown as serving the same trend-and-turning-point role, with the Spearman series smoother than fast %K. Fast-stochastic is a percent-rank oscillator of the close within a high-low window and is the supplied comparison baseline for smoothness and shared purpose.

Editorial reading

Editorial note: keep the spearman-indicator on the same closing-price window as fast-stochastic so the shared role and the smoother rank path can be judged directly. That is a construction lesson, not a claim that one oscillator replaces the other.

Educational research material, not investment advice. Historical source context does not establish present-day performance.
31 of 42 in the Stochastic oscillator track
201238-43 pp.Next on Stochastic oscillatorGold as a regime-dependent hedge in the euro-area crisisIn 2011 gold's yearly correlation with the S&P 500 flipped to about -0.72, its link with the CRB index turned negative, and its correlation with Eurostoxx bank futures and Unicredit reached about -0.90.
All readings on this track · 42 readings
  1. 1987Stochastic fast and slow construction as a rebuildable stack
  2. 1989Building the stochastic oscillator from close location
  3. 1990Monthly stochastics as a multi-year bond regime filter
  4. 1990Walk-forward screen for yen indicator rules
  5. 1990Slow stochastic construction for index pullback entries
  6. 1991Random Walk Index construction with an adaptive lookback
  7. 1991Building a two-stage stochastic oscillator from close location
  8. 1992Constructing fast and slow stochastic oscillator lines
  9. 1992Constructing nested stochastic lookbacks
  10. 1994Construct the four-state price-volume rank before filtering it
  11. 1996Crowded stochastics, false breakouts, and hidden stops
  12. 1997Fade and follow entries from stochastic extremes
  13. 1998Oversold confirmation as a staged rule-based-entry case
  14. 1999Constructing regular and slow stochastic oscillators
  15. 2001Construct a variable-interval simple moving average from stacked extremes
  16. 2001Threshold RSI and stochastic setups with next-bar stops
  17. 2001Two tests of a rate-adjusted earnings-yield gap
  18. 2002Constructing a two-line stochastic from a range-normalized close
  19. 2002Inspect mechanical stochastic daytrade rules on one bar
  20. 2003Constructing an adaptive stochastic RSI
  21. 2003Four parameters that construct a stochastic oscillator
  22. 2004Volume breakout as signal, pullback as entry
  23. 2004A first currency-market checklist with two averages and a slow stochastic
  24. 2005Shared-scale cycle indexes with companion oscillators
  25. 2005Current-bar versus prior-bar range construction for the stochastic oscillator
  26. 2005Two-session moving-average pullback short
  27. 2006Market condition as a permission layer for moving averages and oscillators
  28. 2008Lock the stop at support before sizing a stochastic entry
  29. 2010Construct a center-line volume oscillator and read it with a stochastic oscillator
  30. 2010Sharpened RSI turns with rainbow averages and a slow stochastic
  31. 2011Build a Spearman rank oscillator from ordered closes
  32. 2012Gold as a regime-dependent hedge in the euro-area crisis
  33. 2012Pairing moving averages with variable-length stochastics
  34. 2014Two-leg stochastic stress oscillator as a rebuild drill
  35. 2014Ingress dates as price bases for relative strength, stochastics, and moving averages
  36. 2017Constructing a dual EMA stochastic from range normalization
  37. 2018Constructing a two-stage stochastic RSI for comparable price-oscillator divergences
  38. 2018Combining a weekly stochastic, a long moving average, and two-day resistance
  39. 2018Weekly and daily stochastic readings with a long moving average and support
  40. 2018A confirming workflow for rotating from discretionary to staples
  41. 2019Stochastic scan thresholds, averages, and formula syntax
  42. 2020Constructing Slow %K as a two-stage helper
By fieldIndicators and filters682 readingsBy year201165 readings
All 170 readings tagged Stochastic oscillator
Also on Stochastic oscillator5 readings
1982Three gates on a 1982 pork-belly short1984Constructing the slow stochastic from a five-session range1985Daily ARIMA range as a filter for intraday stochastic divergence1986Auditing stochastic crossovers with moving-average baselines1987Stochastic fast and slow construction as a rebuildable stack