Intraday Momentum Index (IMI)

Categories: Trading, Metrics

In general, momentum relates to how strongly you're moving in a direction. If you're on rollerblades and have too much momentum...hello, tree.

The Intraday Momentum Index measures whether a stock is getting a little wobbly on its skates. It's a technical indicator, which means investors use it to predict which direction a stock will go in the near future. Specifically, the IMI quantifies whether a stock has been either rising or falling unsustainably fast, tipping an investor to a possible turn-around.

During any span of time, a stock is going to have up days and down days. The IMI compares the amount of gains the security posted on its up days with the amount of losses it posted on its down days. If the ratio is out of whack to either extreme, it could suggest that a change of direction might be coming soon.

To calculate an IMI figure, first total the gains posted in up days for whatever period of time you're looking at. Then divide by the total gains on up days added to the total losses on down days. So...total gains divided by (total gains plus total losses), giving you a ratio of gains to total movement. It lets you know what percentage of all the movement was in the upward direction.

The resulting fraction is then multiplied by 100. That figure, a number somewhere between zero and 100, represents the IMI reading for the stock.

A big number (between 70 and 100) means that there have been lots of gains and not many losses (a score of 100 would indicate no losses whatsoever in the sample). It suggests that the stock has become overbought...it's flown a little too high, too fast, and might face a near-term correction.

On the other hand, an IMI number that comes in low (between zero and 30) suggests an oversold situation. The stock has seen lots of losses and not many gains. Bottom feeders and cockeyed optimists are bound to step in soon and start buying the stock, setting it up for a bounce.

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Finance: What is the Historical Trading ...17 Views

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Finance, a la shmoop. What is a historical trading range? All right you know how [The question written on a blackboard]

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some Wall Street words are arcane, uh no arcane.. they say one thing but they mean [Pong being played]

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something entirely different? Yeah well this is not one of those times.

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Historical trading range, darn well you could say that AT&T has had a historical [AT&T tower]

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trading range at a given price largely because well here's its stock chart for

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the last umpteen years and you can see that it hasn't really moved sort of [AT&T showing a fairly consistent price over time]

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lived between 30 and 40 bucks a share more or less forever it seems all the

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investment gains to AT&T shareholders came through the company paying massive [Definition of dividend written on a 100 dollar bill]

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dividends but historical ranges aren't just about stock prices alone like

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here's the historical trading range of the price to earnings ratio of the S&P

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500 so this chart shows the range of p/e multiples from 1880 to today ish and [Arrows showing the date range on the graph]

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note that the lion's share of multiples lived in this band from about ten times [Lion's head appears]

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to about 20 times and this was the range of multiples in yes there were outliers

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like down here in the dumps after the economic hangover post-world War two [Man welding in a workshop]

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repair work and then up here as well where earnings were actually very low

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like one-time low so the price to earnings ratio was very high right like [Arrow pointing to the highest peak on the graph]

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all the companies missed their numbers horribly went negative and stuff

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all right like the company used to trade for 20 bucks a share and earned a dollar

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well it might have had in that short period only a dime of earnings when

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everything went bad and the world was ending but the stock went down 40 percent to [Picture of a city on fire]

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12 bucks and on a dime of earnings while that 12 bucks seemed like a huge

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multiple at 120 times but Wall Street knew the world wasn't ending and things

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did come back and well here we are doing this video, so the short lived things get

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tossed out and when you look at ranges you look at their history not just one [Bag labelled 2008 recession is chucked out the door of a house]

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moment in time but decades in the past and you think about the ranges and what [Highlighted area on the graph going further back in time]

01:51

it implies in the future if anything and when in doubt yes you just sing Oh home

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on the range, where the price to earnings ratio [Girl sat next to a fire with a guitar singing]

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plays, or something like that historical trading range that's what it

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is go check it out...

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