The PMO Buy All Indicator is starting to weaken off of an extreme (100) level. As you can see in the chart above, it has paid to get cautious in previous instances.
The exceptions to the rule were in December 2017 (early), May 2018 (early). While it is not a perfect indicator – it does give you a good measure of where you have been rewarded for getting cautious (first sign of red off 100 level) – on balance.
While all indicators should be used as barometers, not crystal balls, it is helpful to have a handful of them working in the background at all times so that you can measure extremes (to be heeded or to be ignored).
The Price Momentum Oscillator (PMO) on an individual stock, is an oscillator based on a Rate of Change (ROC) calculation that is smoothed twice with exponential moving averages that use a custom smoothing process. Because the PMO is normalized, it can also be used as a relative strength tool. Stocks can thus be ranked by their PMO value as an expression of relative strength.
