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PMO Analysis Identifies Short-Term Extremely Oversold Conditions


The Price Momentum Oscillator (PMO) is a measure of internal strength and momentum. You can read more about the PMO in ChartSchool. Every stock, index, ETF, mutual fund has a PMO value each day. It can be rising or falling, have a crossover BUY signal (or not) generated by the PMO crossing above its 10-EMA, and finally, it can have a value above or below zero. We calculate PMO Analysis charts based on those criteria. Note that you can only generate a PMO Analysis chart for an index or sector ETF because is comprised of a group of stocks. Since we are looking at percentages, we calculate the PMO value for each member of the group and use the values to calculate a percentage.

Looking through the DecisionPoint Market Indicator (DPMI) chart pack, I found these PMO analysis charts and noticed that they are all hitting oversold bottoms in the short term. Note in the first chart I have annotated the time frames for each indicator window. When you look at what is being measured it makes sense. In the short term, we are interested in how many stock members are rising. In the intermediate-term we count how many stocks are on a PMO BUY signal. In the longer term, we determine how many stocks in the group have values above zero. I've annotated on all of the charts areas of support. The red highlights are for readings that are in extremely oversold territory and could resolve upward. The yellow highlight is showing that readings are in oversold territory and have reached an area where many previous bottoms have occurred, but not quite in extremely oversold territory.

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- Erin

Erin Swenlin
About the author: helped create and manage the website alongside her father, Carl Swenlin. Together, Erin and Carl launched the DecisionPoint daily blog in 2009. She hosts the MarketWatchers LIVE web show at, and is also a Member of the CMT Association. Learn More
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