The beginning of the Scientific method, if I recall correctly is to postulate a phenomenon or a set of related circumstances and their cause.
Without Proof almost anything can be decided upon.
In this case the postulate would be in math formula style:
C^x = P^x
where
C = A rational and correctly figured CMI
x= the standard deviation (1-4)
P= Price
So if CMI is figured in such a way that its raw total falls within a particular deviation of CMI numbers then the price of the security should correspond.
A quick example would be if CMI was 9 and this was in the 3rd standard deviation then the price of the security would in this case be found to have varied or moved from the time of the beginning of the calculation until its conclusion - positively three standard deviations.
If the third standard deviation is 100 points or more then a CMI reading at 9 would indicate a movement in the index or security of 100 or more.
If such a CMI calculation were not to result in such a movement this theory would be able to shown to be false for that calculation but not all such calculations. In such a case a different calculation as to CMI would be tried.
Can it be proven positively that this formula is correct?
