Chande Momentum Oscillator
The Chande Momentum Oscillator (CMO) is used to indicate the trend of the given stock. It was invented by Tushar Chande and has become a popular indicator. It calculates the difference between sum of all recent up days and the sum of all recent down days and then divides that by the sum of price movement within those days. The actual formula looks like this difference = Close[ThisBar] - Close[PreviousBar] if diff > 0 then cmo1[ThisBar] = diff and cmo2[ThisBar] = 0 if diff < 0 then cmo2[ThisBar] = -diff and cmo1[ThisBar] = 0 sum1 = summation of cmo1 for the last n bars sum2 = summation of cmo2 for the last n bars Now the actual CMO may be calculated. CMO[FirstBar] = ((sum1-sum2)/(sum1+sum2)) * 100 For each bar after this sum1 = sum1 - cmo1[n Bars Ago] + cmo1[ThisBar]/ sum2 = sum2 - cmo1[n Bars Ago] + cmo1[ThisBar] CMO[ThisBar] = ((sum1-sum2)/(sum1+sum2)) * 100 Luckly for us we do not need to calculate it. The indicator can be placed on your chart with little work. When the Chande Momentum Oscillator goes above 50 it is said to be overbough and could possibly come down. When it is below -50 it is said to be oversold and could possibly come up. 
Many investors will add a Moving Average line to the CMO and use a cross above the line as a buy signal and a cross below the line as a sale signal.
Like This Page, Link To Us
|
