Chande Momentum Oscillator (CMO)

Chande momentum oscillator (CMO) is a variation form of RSI (Relative Strength Index).

The RSI often traces out a series of rising or falling peaks and troughs, which, when reversed, offer important buy or sell alerts. The Chande momentum oscillator (CMO), named after its inventor, Dr. Tushar Chande, is a variation on the RSI, yet is uniquely different. It has three characteristics:

The calculations are based on data that have not been smoothed. This means that extreme short-term movements are not hidden, so the indicator reaches overbought and oversold extremes more often, but not enough to result in too many signals.

The scale is confined within the -100 to + 100 range. This means that the zero level becomes the equilibrium point. With the RSI, the 50 level is the equilibrium point and is not always readily identifiable. With zero as the pivotal point, it is easier to see those periods when momentum is positive, and those when it is negative. The zero equilibrium therefore makes comparisons between different securities that much easier.

The formula uses both up and down days in the calculation.