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The Market Direction Indicator is used, in conjunction with the Clayburg Directional Day Filter, to predict the direction of the major trend early in the trading day.

The indicator will appear as two different colored histograms. As with all of these trading tools, a blue color will relate to a buying situation and a red color will indicate a selling situation is in order. The blue histogram will plot above the zero line and the red histogram will plot below the line. This indicator measures both the positive and negative energies within the market and then does a comparison between the different energy levels.

The positive energy of the market is charted by the blue histogram while a red plot depicts the level of negativity in the market.

Therefore, 60 -- 90 minutes into the market day, if you observe more blue than red on the subgraph containing the indicator you can be confident in expecting an up day for the remainder of the day. Conversely, an abundance of red visible on the general plot will be telling you that the most profitable trades will be found on the short side for this day.

There is a third plot on the indicator which measures the balance between the positive and negative internal market forces. This calculation is represented by the line you will see plotted overlaying the histograms. If it is plotted on the red portion of the indicator it will appear as a yellow line while it will appear as a white line when it is in the blue portion of the subgraph.

This line is a very important one to observe occasionally during days which are identified early on in the trading day as being sideways in nature. Careful observation of this plot can give you an early warning of a general trend change for the day.