A great question was recently asked in the Wyckoff Forum about the Activity report described in the Tape reading course.

Goerg7e said that he would like to keep up an activity chart, as shown in the Tape Reading Course. But, I do not see the formula for it. If it is not proprietary, kindly send me the formula. The activity is calculated by dividing the volume by the time. (volume/time).

George7e then noticed that the numbers in the Activity report did not match the formula and, quite naturally, asked why. I thought our response might be interesting.

This is a great question and, after a little research, discovered that the answer provides a little history of how SMI operated and some of the problems they encountered that no longer exist today.

Back in the 1970′s the ticker tape was still the primary method of getting stock prices quickly to brokerage houses and anyone else interested in receiving intra day market action. The Stock Market Institute had their own ticker tape machine and used it to track the market’s action. The tape was a printed continuous ribbon of paper tape which required less than 1 roll a day, but was over 3 rolls of mostly volume deleted and repeat prices omitted when the formula was changed.

Originally the Activity was based on, believe it or not, the actual adjusted footage of the ticker tape divided by the number of 5 minute periods in a wave.

In the 1970′s the market volume really began to increase and it was difficult for the Western Union (they provided the ticker tape) to keep up. To keep up, the Exchange compressed the tape by deleting certain digits related to the stocks price and volume.

The actual footage had to be counted and adjusted when the tape was running late. The NYSE used to report in 3 ways to speed up the tape. It would first go Digits deleted, then Volume deleted and then finally Repeat Prices omitted. The tape footage during these 3 processes then would have to be multiplied to get the actual footage. The multipliers were:
DD 1.15
VD 1.4
RPO 1.5

Gary Schuber, who was just beginning his SMI career remembers spending hours calculating the figures so the daily activity report could be included in the daily Pulse of the Market report. He often stayed late to make sure the report was finished and faxed to Wyckoff students in a timely manner.

Those days are long gone and now the Activity is a simple calculation of dividing the volume by the length of the wave and dividing by two. Since the Activity Report on Chart 3-14 reflects the calculations described above, it does not exactly match the present formula. Thankfully, technology has taken us beyond that measuring the length of the ticker tape and making adjusted calculations.

Thanks to Gerog7e for giving us an opportunity to share a little SMI history while answering his excellent and most perceptive question.