Candlestick Momentum Index with TSI [CMIT]

Creator: Tushar Chande

#momentum #candlestick #TSI #body-size 

CMIT (Candlestick Momentum Index with TSI smoothing) tells you whether candle bodies are growing or shrinking — which tells you whether momentum is building or fading. It uses the same dual-smoothing approach as the TSI indicator, but instead of measuring price changes, it measures candle body sizes. When candle bodies are getting larger, CMIT rises — momentum is strengthening. When they’re getting smaller, CMIT falls — momentum is weakening. 

Default parameters: 25, 13, 7 

How to read it: 

A smooth line with a signal line running alongside it. When CMIT is rising, candle bodies are getting bigger — the market is moving with increasing force. When CMIT is falling, candle bodies are shrinking — the market is losing steam. The signal line crossover gives you entry and exit timing, just like TSI. 

Useful readings: 

– CMIT rising — candle bodies are expanding. Momentum is building. The current trend has fuel. 

– CMIT falling — candle bodies are shrinking. Momentum is fading. The current trend is running out of energy. 

– CMIT crosses above signal line — momentum is turning positive. Bullish shift. 

– CMIT crosses below signal line — momentum is turning negative. Bearish shift. 

– CMIT near zero — candle bodies are minimal. The market is compressed and indecisive. 

– Divergence from price — price makes a new high but CMIT doesn’t — the new high is built on weak candles. Trend exhaustion. 

Use cases: 

– Trend confirmation: Only trade in the direction of CMIT. If CMIT is rising, favor longs. If falling, favor shorts. 

– Early trend warnings: CMIT turns down before price does — because candle bodies shrink before the trend reverses. That’s your early exit signal. 

– Breakout quality: A breakout accompanied by rising CMIT is a real breakout — the candles are getting bigger. A breakout with falling CMIT is suspect — the candles are weakening. 

– Divergence trading: When price and CMIT disagree, the trend is hollow. Prepare for reversal. 

Objective rules: 

– Go long when CMIT crosses above its signal line. 

– Go short when CMIT crosses below its signal line. 

– Exit when the cross reverses. 

– Avoid trading when CMIT is flat near zero — momentum is dead. 

– Use divergence as an early warning to tighten stops or exit. 

What makes it unique: Most momentum indicators measure price direction. CMIT measures candle body growth — the physical size of each bar. A trend can be rising on tiny, weak candles (CMIT falling) or on big, strong candles (CMIT rising). CMIT sees the difference. It tells you whether the trend is backed by real force or just drifting.

The indicator table value in TradePoint & RZone also provides you with a list of all values of this indicator for any group of stocks. This will allow you to compare the readings of this indicator across different stocks.

Using the system builder, you can develop various strategies based on the different conditions already present in this indicator. Additionally, it can be used with other indicators or price patterns to develop effective trading strategies. For any group of stocks and market segments, you can scan and backtest stocks based on those strategies.