CMO

 

#momentum #oscillator #overboughtoversold 

Inventor: Tushar Chande 

A cousin of RSI, also by Tushar Chande. It compares total up-moves against total down-moves over the period but without RSI’s smoothing, so it reacts faster. It moves between -100 and +100 with zero as the middle line. 

Default period: 14 (9 for faster signals) 

Line above zero indicates buyers are stronger. Line below zero indicates sellers are stronger. 

Useful readings: 

Above +50: Overbought zone, price stretched up 

Below -50: Oversold zone, price stretched down 

Crossing above zero: Momentum turning bullish 

Crossing below zero: Momentum turning bearish 

Holds above zero during dips: Uptrend healthy, dips buyable 

Price makes new high but CMO does not: Bearish divergence 

Price makes new low but CMO does not: Bullish divergence 

Objective rules: 

Bullish: CMO crosses above zero. 

Bearish: CMO crosses below zero. 

Overbought exit: CMO crosses back below +50 after staying above it 

Oversold exit: CMO crosses back above -50 after staying below it 

Trend filter: Take longs only when price is above 200 SMA, shorts only when below 

What makes it unique: 

It skips RSI’s smoothing entirely, showing raw momentum on a symmetric -100 to +100 scale. The zero line gives it a clean bull/bear midpoint that RSI lacks. 

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.

This indicator is available in the System Builder on RZone & TradePoint for all charting methods. 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.

Click here to learn more about CMO Indicator

Default period: 14 (9 for faster signals) 

Default period: 40 (20 for faster signals) 

The indicator is applicable to all types of charting. It is calculated based on the number of columns on P&F charts, bricks on Renko charts, lines on Line-break charts, candles on Heikin-Ashi charts, and lines on Kagi charts. While the formula and reading of the indicators remain the same, they become more dynamic on these charts.