An oscillator that measures not where the close sits inside the range, but how far the close stands from the range midpoint, double-smoothed. William Blau refined the Stochastic to cut whipsaw and leave only the lean of momentum.
The Stochastic Momentum Index (SMI) is an oscillator devised by the technical analyst William Blau as a refinement of the ordinary Stochastic.
The ordinary Stochastic measures where the close sits as a percentage from the bottom of the recent range.
The SMI shifts that by one step. It looks at the distance between the close and the midpoint of the range (the middle between the recent high and low), then double-smooths it.
In other words, it measures whether the close is above or below the center of the range, and by how far. The scale runs from −100 to +100, with 0 at the center.
When the close sits at the midpoint, the SMI reads 0. Pinned to the top of the range it reads +100, to the bottom −100. It expresses which side of the range the close leans toward as a single smooth line.
Because it is double-smoothed, the line is gentler than the ordinary Stochastic and small false signals are reduced. That smoothness is the SMI's defining trait.
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