The Stress Indicator is a study designed by Perry Kaufman in order to offer a better risk protection during times of market stress. Designed for pairing stocks with indexes, it combines fundamentally different strategies.

Using data from both the index and the stock, it applies the Stochastic indicator three times: to the stock, to the index, and to the difference between the stochastic values of the two. The latter value is the main plot which enables you to find points where the stock is overbought or oversold in relation to the index. By default, the overbought level is set to 90 and the oversold level to 10.

Input Parameters

Parameter Description
index Defines the index to be analyzed in pair with the stock.
length Defines the period upon which the highest and lowest prices of both the stock and the index are found. Used in stochastic values calculation.
over bought Defines the overbought level.
normal level Defines the normal level.
over sold Defines the oversold level.


Plot Description
StochStock The stochastic price of the stock.
StochIndex The stochastic price of the index.
Stress The Stress indicator.
OverBought The overbought level.
NormalLevel The normal level.
OverSold The oversold level.

Further Reading

1. "Timing The Market With Pairs Logic" by Perry Kaufman. Technical Analysis of Stocks & Commodities, March 2014.


*For illustrative purposes only. Not a recommendation of a specific security or investment strategy.