Stochastic Momentum Index (W. Blau):

This is the Stochastic Momentum Index, a.k.a. the SMI indicator, was introduced by William Blau, see Stocks & Commodities, January 1993 for additional information.

Stochastic Momentum Index for NinjaTrader 8

Indicator Description

The Stochastic Momentum Index (a.k.a. the SMI indicator) is a modified version of Blau’s Double Smooth Stochastics indicator. An in depth discussion of the SMI indicator was featured in our Indicator Spotlight newsletter.

The indicator plot on a range on a scale from -100 to +100. Therefore, you may use the same rules of interpretation as with the standard Stochastics indicator. If the SMI plot has been moving below the -50 level and crosses the signal line, it can be interpreted as a buy signal. In contrast, if the SMI has been above the 50 level and crosses below the signal line, you may interpret it as a sell signal. This setting corresponds to the 25 / 75 levels in Blau’s Double Smoothed Stochastics. See Chart illustration.

Blau developed the SMI indicator to provide more reliable stochastic readings, eliminating false swings. It calculates the distance of the current close as comparing it to the median of the high/low range of price. As a result, you may consider the Stochastic Momentum Index as an improvement of the stochastic oscillator.

The SMI indicator is best used in combination with a mid/higher time frame trend filter and volume analysis. You may for example review the Daily Regression Channel, the Efficiency Ratio, the Moving Average Wave or the Heikin Ashi, along with the Force Index

Other library momentum oscillators

In addition to the Stochastic Momentum Index, our standard momentum oscillators category feature a number of other entries, including the Acceleration Deceleration, Awesome Oscillator, Double Smoothed Momentum (Blau) Double Smoothed Sochastics (Blau), Double Smoothed Sochastics (Bressert) , Fast Stochastics, Stochastic RSI, RSI, Slow RSI and the Traders Dynamic Index (TDI). The TDI indicator specifically was reviewed at length in our Indicator Spotlight. These are built with trend indicators, tracking short-term overbought or oversold conditions. I.e. when the oscillator value approaches the upper extreme, it indicates overbought, and as it approaches the lower extreme, oversold.

Furthermore, we also have a category for more advanced oscillators, for example the Connors RSILaguerre RSI, MACD BB Lines, Rainbow Oscillator and the QQE. These tools build on the same concept as the standard momentum oscillators, but with a higher degree of sophistication. In general, they allow for added value approaches, utilizing a set of more complex algorithms.

The Ichimoku Kinko Hyo, discussed in our Indicator Spotlight, may also be considered as a momentum indicator.

Finally, we have a category for Gapless Indicators, featuring among others the Gapless MACD and the Gapless TEMA.

The SMI indicator is available for NinjaTrader 8.

Stochastic Momentum Index (W. Blau):