Name, Sometimes Called:
Volume * Price Momentum Oscillator
Sometimes abbreviated to V*PMO, or just VPMO
Brief Description:
The Volume * Price Momentum Oscillator is a combination
of price and volume indicators.
Definitions, Formulas:
As its name states, Volume * Price Momentum Oscillator
(V*PMO) is both a price and volume
momentum
oscillator.
To compute it we
First, calculate today’s V*PMO input value:
VTODAY * (CPTODAY
– CPTODAY-1)
where
VTODAY = today’s volume
CPTODAY = today’s closing
price
CPTODAY-1 = yesterday’s
closing price
Then smooth the values using a 3-day exponential moving average
(EMA):
V*PMO = EMA(3)(VTODAY,VTODAY-1,VTODAY-2)
Positive Development Calculation:
For this TAI, a new
positive development (NPD) occurs when V*PMO crosses over zero.
That is, when V*PMO x+ 0.
This TAI is no longer positive when V*PMO crosses under zero. In
other words, when V*PMO x- 0.
If this TAI is still positive tomorrow it will no longer be new,
but will be a Cumulative
Positive Development (CPD)
History:
The origins of this indicator
are unknown. Very few trading systems mention it.
Colby (in his book The
Encyclopedia of Technical Market Indicators, 2nd. ed.,
McGraw-Hill, 2003, pg. 774) notes that “As with simple momentum
indicators generally, when the n-period exponential moving average
of V*PMO is positive, momentum is bullish, so we buy, entering or
initiating a long
position.”
|
