Stochastic Momentum Index
SMI
What it is
The SMI is a refined version of the classic Stochastic: instead of locating price in the high-low range, it locates it relative to the MIDPOINT of that range, then smooths the result. It runs from -100 to +100 and filters noise better.
How to read it
Above +40 = solid bullish momentum. Below -40 = solid bearish momentum. The neutral zone (±20) signals indecision. Zero-line crossings confirm a momentum regime change more reliably than the raw Stochastic.
Common reference points
- Strong bullish momentum> +40
- Bullish momentum+20 to +40
- Neutral zone-20 to +20
- Bearish momentum-40 to -20
- Strong bearish momentum< -40
Orders of magnitude, not a rule: the same number does not mean the same thing from one sector to the next.
What it does not tell you
Double-smoothing makes the SMI slower than ROC: it confirms late but with fewer false signals. Use it to validate a trend, not to anticipate an early reversal.
Other measures — Technical
Educational content. Polaris is not a registered investment adviser and makes no recommendation.