It was founded by William Blau, the Stochastic Momentum Index was delineated within the January 1993 issue of Technical Analysis of Stocks and Commodities magazine.
The Stochastic Momentum Index (SMI) could be a drum sander version of the classic random generator with a motivating twist. rather than shrewd the gap this worth relative to the recent n-period high/low vary, the SMI is calculated by scrutiny the value to the center average of the n-period high/low vary. The raw worth variations area unit then ironed by a double EMA (an EMA of AN EMA of the raw worth differences).
When the shut is bigger than the center of the vary, the Stochastic Momentum Index (SMI) is positive. once the shut is a smaller amount than the center of the vary, it is negative. The result is a generator that ranges between +/- a hundred and is a smaller amount erratic than an equal amount random generator.