---
title: "Momentum Indicators"
description: "Oscillators and momentum measures that describe the rate and direction of price change, including the Commodity Channel Index and related tools."
canonical: https://www.getswoopr.com/indicators/momentum/
source: "Swoopr Investment: https://www.getswoopr.com"
---

## Direct Answer



Oscillators and momentum measures that describe the rate and direction of price change, including the Commodity Channel Index and related tools.





      


# Momentum Indicators



> Momentum indicators measure the speed and persistence of price change: oscillators such as RSI, the stochastic oscillator, the commodity channel index and rate of change, which are bounded or centered and read for overbought and oversold extremes, and the cross-sectional and time-series momentum measures from the academic literature, which rank assets by their past return over months. The two groups share a name and little else.

## What do Momentum indicators have in common?

Every indicator in this category starts from the same quantity: the change in price over a lookback window. What differs is the window and what is done with the change. The chartist oscillators compare today's price with its recent range or its recent average over days or weeks, scale the result to a bounded range, and are read for extremes and divergences. The academic momentum measures compute the return over the past six to twelve months, often skipping the most recent month, and are read as a ranking across many assets or as the sign of a single asset's own trend.

The category divides accordingly. Bounded oscillators (RSI, the stochastic family, Williams %R, the stochastic momentum index, the ultimate oscillator, Connors RSI, the intraday momentum index, the relative vigor index, the true strength index) move between fixed limits and are read for overbought and oversold readings.

Centered oscillators (momentum, rate of change, the price oscillator, the awesome and accelerator oscillators, the Chande momentum oscillator, the Coppock curve, the know sure thing, the Klinger oscillator) swing around zero and are read for sign changes and divergences. Cross-sectional measures (12-1, 6-month and 3-month momentum, momentum rank, relative and residual momentum, risk-adjusted and volatility-adjusted momentum, 52-week high momentum) compare one asset with many at a point in time. Time-series momentum and dual momentum compare an asset with its own past and with cash.

What they share is that momentum, measured over months, is one of the most replicated return patterns in finance: Jegadeesh and Titman documented it in 1993 and it has held across asset classes and countries since. What the oscillators share is a different and weaker claim, that short-term extremes in the rate of change tend to revert, which holds in ranges and fails in trends.

## How do you choose a Momentum indicator?

- Decide which momentum is meant: the oscillators answer whether a move over days is stretched, the academic measures answer whether an asset's return over months is strong relative to others
- In a ranging market, read a bounded oscillator for extremes; in a trending market, read the same oscillator for divergences only, since it can stay overbought for weeks
- For a ranking strategy, use 12-1 momentum as the base case and consider the risk-adjusted or residual versions if the aim is to reduce the crashes that follow sharp market rebounds
- Prefer a centered oscillator (rate of change, the price oscillator) when the question is the sign and strength of the trend rather than its extreme
- Do not stack several oscillators built from the same price change; RSI, the stochastic and Williams %R tell one story three ways

## Momentum indicators at a glance

| Indicator | What it measures | How it is read |
| --- | --- | --- |
| [12-1 Momentum](https://www.getswoopr.com/indicators/momentum/12-1-momentum/) | The return over the past twelve months excluding the most recent month. | A higher value means stronger past performance over the formation window. |
| [3-Month Momentum](https://www.getswoopr.com/indicators/momentum/3-month-momentum/) | The percentage price change over roughly the past three months, about 63 trading days. | A positive value means price is higher than three months ago, a negative value lower. |
| [52-Week High Momentum](https://www.getswoopr.com/indicators/momentum/52-week-high-momentum/) | A momentum measure based on how close the current price is to its highest price of the past 52 weeks. | A ratio near 100 percent means price is at or close to its yearly high, which this approach treats as strong momentum. |
| [6-Month Momentum](https://www.getswoopr.com/indicators/momentum/6-month-momentum/) | The percentage price change over roughly the past six months, about 126 trading days. | Positive values mean price is higher than six months earlier. |
| [Accelerator Oscillator](https://www.getswoopr.com/indicators/momentum/accelerator-oscillator/) | A Bill Williams indicator that measures the acceleration of market driving force. | Positive values mean momentum is accelerating upward relative to its recent average, negative values the opposite. |
| [Awesome Oscillator](https://www.getswoopr.com/indicators/momentum/awesome-oscillator/) | A Bill Williams momentum indicator equal to the difference between a 5-period and a 34-period simple moving average of the median price, (high + low) / 2. | Above zero, short-term average price is above the longer-term average, indicating positive momentum; below zero, the reverse. |
| [Balance of Power](https://www.getswoopr.com/indicators/momentum/balance-of-power/) | Compares the close-to-open move with the full high-to-low range of a bar to gauge whether buyers or sellers controlled the bar. | Positive values show the close finished above the open, with larger values meaning the move covered more of the bar's range. |
| [Chande Momentum Oscillator](https://www.getswoopr.com/indicators/momentum/chande-momentum-oscillator/) | Developed by Tushar Chande, the CMO divides the net of up-day and down-day price changes by their total over a lookback window. | Positive readings mean gains outweighed losses over the window, negative readings the opposite. |
| [Connors RSI](https://www.getswoopr.com/indicators/momentum/connors-rsi/) | A composite oscillator by Larry Connors that averages three components: a short RSI of price, a short RSI of the up/down streak length, and the percentile rank of the one-day price change. | It ranges from 0 to 100. |
| [Coppock Curve](https://www.getswoopr.com/indicators/momentum/coppock-curve/) | A long-term momentum indicator by Edwin Coppock, originally designed for monthly stock index data. | Readings above zero indicate positive long-term momentum and below zero negative. |
| [Cross-Sectional Momentum](https://www.getswoopr.com/indicators/momentum/cross-sectional-momentum/) | Momentum measured relative to peers: assets in a universe are ranked by trailing return, and the strongest are compared with the weakest at the same point in time. | Assets with positive scores outperformed the group and those with negative scores underperformed, regardless of absolute direction. |
| [Dual Momentum](https://www.getswoopr.com/indicators/momentum/dual-momentum/) | Gary Antonacci's approach that combines relative momentum, choosing the stronger of two or more assets, with absolute momentum, holding the chosen asset only when its own return beats a safe benchmark such as Treasury bills. | The relative test picks the stronger asset; the absolute test checks that it is also beating cash. |
| [Elder Ray Index](https://www.getswoopr.com/indicators/momentum/elder-ray-index/) | Alexander Elder's Elder-Ray splits buying and selling pressure relative to a trend proxy, a 13-period exponential moving average of close. | Positive Bull Power means buyers pushed price above the average; negative Bear Power means sellers pushed it below. |
| [Fast Stochastic Oscillator](https://www.getswoopr.com/indicators/momentum/fast-stochastic-oscillator/) | Compares the latest close with the high-low range of the last n bars, showing where price sits within that range on a 0 to 100 scale. | Readings near 100 mean the close is at the top of its recent range and near 0 at the bottom. |
| [Fisher Transform](https://www.getswoopr.com/indicators/momentum/fisher-transform/) | John Ehlers' transform converts prices, normalized to a range between -1 and +1, into a variable with an approximately Gaussian shape using the inverse hyperbolic tangent. | Large positive values mean price is near the top of its recent range and large negative values near the bottom. |
| [Intraday Momentum Index](https://www.getswoopr.com/indicators/momentum/intraday-momentum-index/) | Tushar Chande's IMI applies the RSI idea to the candle body (close minus open) instead of close-to-close change. | It ranges from 0 to 100. |
| [Kaufman Efficiency Ratio](https://www.getswoopr.com/indicators/momentum/kaufman-efficiency-ratio/) | Perry Kaufman's efficiency ratio measures how directly price moved over a window by dividing the net price change by the total path length of all bar-to-bar changes. | It ranges from 0 to 1. |
| [KDJ Stochastic](https://www.getswoopr.com/indicators/momentum/kdj-stochastic/) | A stochastic variant popular in Asian markets that adds a third line J to the standard K and D. | K and D behave like the slow stochastic, while J can move beyond 0 to 100 and reacts faster. |
| [Klinger Oscillator](https://www.getswoopr.com/indicators/momentum/klinger-oscillator/) | Stephen Klinger's volume-based oscillator that combines price trend direction and volume into a daily 'volume force', then takes the difference between a short and a long exponential average of that force to show money flow momentum. | Positive values suggest volume force has been stronger recently than over the longer window, reflecting accumulation-type behavior. |
| [Know Sure Thing](https://www.getswoopr.com/indicators/momentum/know-sure-thing/) | Martin Pring's KST sums four smoothed rate-of-change series of increasing length, with longer-term cycles given higher weights. | Positive values indicate broad positive momentum across the four timeframes and negative values the reverse. |
| [Majority Rule](https://www.getswoopr.com/indicators/momentum/majority-rule/) | A voting rule applied to momentum: several binary signals, such as positive returns over different lookbacks, are counted, and the asset is treated as trending only if most of them agree. | A share above one half means most lookbacks agree on an upward trend, while a share below one half means they do not. |
| [Momentum Acceleration](https://www.getswoopr.com/indicators/momentum/momentum-acceleration/) | Measures the change in momentum itself: the current momentum reading minus an earlier reading. | Positive acceleration means momentum is increasing, even if the trend is still negative; negative acceleration means it is fading, even if the trend is still positive. |
| [Momentum Indicator](https://www.getswoopr.com/indicators/momentum/momentum-indicator/) | The simplest momentum measure: the difference between the current price and the price n periods earlier. | Above zero (or above 100 in ratio form) means price is higher than n periods ago, and below means lower. |
| [Momentum Rank](https://www.getswoopr.com/indicators/momentum/momentum-rank/) | Ranks assets in a universe by a momentum score, typically trailing return, so each asset gets a position from strongest to weakest. | A rank of 1 is the strongest momentum in the universe. |
| [Price Oscillator](https://www.getswoopr.com/indicators/momentum/price-oscillator/) | The percentage difference between a fast and a slow moving average of price. | Positive values mean the fast average is above the slow one, which is read as upward momentum, and negative values the opposite. |
| [Rank Correlation Index](https://www.getswoopr.com/indicators/momentum/rank-correlation-index/) | Applies Spearman's rank correlation to price: it correlates the rank of each recent price with the rank of its time order. | It ranges from -100 to +100. |
| [Relative Momentum](https://www.getswoopr.com/indicators/momentum/relative-momentum/) | Compares one asset's trailing return with another asset or a benchmark, rather than with its own past or with the whole universe. | A positive value means A has outperformed B over the lookback, a negative value that B has led. |
| [Relative Vigor Index](https://www.getswoopr.com/indicators/momentum/relative-vigor-index/) | John Ehlers' oscillator based on the idea that closes tend to be higher than opens in uptrends and lower in downtrends. | Positive values mean closes have tended to finish above opens, indicating upward vigor, and negative values the reverse. |
| [Residual Momentum](https://www.getswoopr.com/indicators/momentum/residual-momentum/) | Momentum computed from the part of a stock's returns not explained by common factors such as the market, size and value. | A high score means the stock has beaten what its factor exposures would predict, while a low score means it has lagged. |
| [Risk-Adjusted Momentum](https://www.getswoopr.com/indicators/momentum/risk-adjusted-momentum/) | A trailing return measure scaled by risk, so assets that earned their return with less volatility score higher. | Higher scores mean more excess return per unit of risk. |
| [SMI Ergodic Oscillator](https://www.getswoopr.com/indicators/momentum/smi-ergodic-oscillator/) | William Blau's SMI Ergodic Oscillator is commonly defined as the difference between the SMI Ergodic Indicator, a double-smoothed true strength measure, and its own moving average signal line. | Positive histogram values mean the indicator is above its signal line, which indicates strengthening upward momentum, and negative values the reverse. |
| [Stochastic Momentum Index](https://www.getswoopr.com/indicators/momentum/stochastic-momentum-index/) | William Blau's SMI measures where the close sits relative to the midpoint of the recent high-low range rather than relative to the low. | Positive values mean the close is above the range midpoint and negative values below it. |
| [Stochastic RSI](https://www.getswoopr.com/indicators/momentum/stochastic-rsi/) | Applies the stochastic formula to RSI values instead of prices, as introduced by Tushar Chande and Stanley Kroll. | It ranges from 0 to 1 (or 0 to 100). |
| [Time Series Momentum](https://www.getswoopr.com/indicators/momentum/time-series-momentum/) | Momentum based on an asset's own past return: if the asset's trailing excess return is positive it is held long, if negative short or in cash, independent of other assets. | A positive trailing return means the trend is up and a negative one down, using the asset's own history as the benchmark. |
| [True Strength Index](https://www.getswoopr.com/indicators/momentum/true-strength-index/) | William Blau's TSI divides the double-smoothed price change by the double-smoothed absolute price change. | Positive values mean smoothed momentum is up and negative values down; crossings of zero and of a signal line are the typical events. |
| [Ultimate Oscillator](https://www.getswoopr.com/indicators/momentum/ultimate-oscillator/) | Larry Williams' oscillator that combines buying pressure over three timeframes (7, 14 and 28 periods) with weights 4, 2 and 1. | It ranges from 0 to 100. |
| [Volatility-Adjusted Momentum](https://www.getswoopr.com/indicators/momentum/volatility-adjusted-momentum/) | A trailing return divided by the asset's realized volatility, so a given move counts for more when volatility is low. | Higher values mean more return per unit of volatility, letting assets with different volatility compare on a similar scale. |
| [Williams Accumulation/Distribution](https://www.getswoopr.com/indicators/momentum/williams-accumulation-distribution/) | Larry Williams' cumulative line that compares each close with the prior close and the bar's extremes to judge accumulation or distribution. | A rising line means closes are repeatedly finishing above the prior close and being credited as accumulation; a falling line indicates distribution. |

Each row is the opening sentence of that indicator's own definition and reading, so the table says exactly what the profile says.






## Guides in This Category



- [Commodity Channel Index (CCI)](https://www.getswoopr.com/indicators/momentum/commodity-channel-index/)





## What limits do Momentum indicators share?

Oscillators are built from the same price change they are meant to interpret, so an overbought reading describes the past move rather than predicting the next, and in a strong trend the reading stays at its extreme while the trend continues. The academic momentum measures have a long record, but it includes crashes: the long-short momentum portfolio lost most of a decade's gains in a few months of 2009 when the market rebounded, and the premium has gone years without being paid. Every version depends on a lookback choice that is reasonable but arbitrary, and none accounts for transaction costs, which are high for a strategy that turns over monthly.

## Frequently Asked Questions

What is the difference between a momentum oscillator and momentum investing?

A momentum oscillator such as RSI measures the speed of price change over days and is read for short-term extremes that tend to revert. Momentum investing ranks assets by their return over the past six to twelve months and buys the strongest, on the evidence that medium-term winners keep winning. The oscillator is a mean-reversion tool and the investing rule is a trend-continuation rule, so they often point in opposite directions.

Why does 12-1 momentum skip the most recent month?

Because returns over the most recent month tend to reverse rather than continue, a pattern documented alongside the momentum effect itself. Measuring from twelve months ago to one month ago keeps the medium-term signal and leaves out the short-term reversal that would otherwise dilute it.

Is an RSI above 70 a sell signal?

Not on its own. An RSI above 70 means the average gain over the lookback has been large relative to the average loss, which in a range often precedes a pullback and in a trend often precedes more of the same. The reading is more useful when it fails to confirm a new price high, which is the divergence most RSI rules are built on.

What is a momentum crash?

A momentum crash is the sharp loss a momentum strategy suffers when a falling market rebounds quickly: the strategy is short the stocks that fell most, and those rebound hardest. Daniel and Moskowitz documented the pattern in 1932 and 2009; the risk-adjusted and volatility-adjusted momentum measures on this page exist to reduce it by scaling exposure down when volatility is high.


      
      



## More in This Section



- [Rate of Change (ROC): Formula, Meaning](https://www.getswoopr.com/indicators/momentum/rate-of-change/)
- [Relative Strength Index (RSI): Formula](https://www.getswoopr.com/indicators/momentum/relative-strength-index/)
- [Stochastic Oscillator: Formula, Meaning](https://www.getswoopr.com/indicators/momentum/stochastic-oscillator/)
- [Williams %R (%R): Formula, Meaning](https://www.getswoopr.com/indicators/momentum/williams-percent-r/)








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