24 basic indicators (9)-MTM

Momentum indicator-MTM

The MTM index is also called the momentum index. Its full name is "momentom Index". It is a medium-and short-term technical analysis tool dedicated to studying stock price fluctuations.

Section 1 principle and Calculation Method of MTM indicators

I. Principle of MTM indicators

Momentum indicator MTM is a kind of dynamic principle used to study the acceleration, inertia, and phenomenon of stock price fluctuations from static to dynamic or from dynamic to static. The theoretical basis of momentum indicators is the correlation between price and supply and demand. It believes that the rise and fall of the stock price will gradually decrease over time, and the speed and energy of the stock price change will gradually slow down, and the market may reverse. In the multi-headed market, as the stock price continues to rise, the energy and speed of the rise of the stock price will inevitably shrink. When the rising energy and speed are reduced to a certain extent, the stock price will be largely reposted or reversed. In the short market, as the stock price keeps falling, the energy and speed of the decline will also shrink, when the energy and speed of the decline shrinks to a certain extent, the market will also experience a sharp rebound or reverse.
Therefore, the momentum indicator is to measure the momentum of stock price fluctuation by observing the speed of stock price fluctuation, so as to reveal the stock price reversal rule and provide an important reference for investors to buy and sell shares correctly.
Ii. MTM metric Calculation Method

Compared with most technical indicators, MTM is easy to understand. MTM indicators include daily MTM indicators, weekly MTM indicators, yearly MTM indicators, and minute MTM indicators. The daily MTM and weekly MTM indicators are often used for stock market research. Although their values are different during calculation, the basic calculation method is the same. In addition, MTM indicators can be calculated using different software versions.
1. First calculation method
Taking the daily MTM index as an example, the calculation process is as follows:
MTM (n) = C-CN
Formula, c = the closing price of the day
CN = closing price before n
N is the calculation parameter. Generally, the starting parameter is 6.
2. Second Calculation Method
Taking the daily MTM index as an example, the calculation process is as follows:
MTM (n) = (C region CN × 100)-100
Formula, c = the closing price of the day
CN = closing price before n
N is the calculation parameter. Generally, the starting parameter is 6.
Although the two calculation methods are different, the meaning of the two calculation methods is the same as that of the analysis and determination methods. In the stock market analysis software, the stock price's momentum line (I .e. the MTM line) is through the connection line of every trading day, and the change of the stock price in the fluctuation can be reflected by the momentum line. The momentum indicator is centered on the 0 line, the 0 line is the rising zone of the stock price, and the 0 line is the falling zone of the stock price. The momentum line reflects the speed of stock price fluctuations Based on the cyclical fluctuations of the stock price around the center line. In addition, in order to make the momentum indicator more intuitive and accurate to reflect the real fluctuations in the stock price, the MTM indicator chart also helps to use another line-mtmma, that is, the moving average line of MTM. MTM indicators are determined based on the relationship between the two lines.

Section 2 General judgment criteria for MTM indicators

The general criteria for MTM indicators are mainly focused on the important reference functions of the 0 axis, the use of MTM lines and stock price curves, and the form of MTM curves. Take the MTM metric on the 12th day as an example. The specific analysis is as follows:

I. Important reference of 0 axis
1. The MTM indicator is centered on the 0 axis. The MTM curve is centered around its upstream and downstream fluctuations.
2. When the MTM curve is above the 0 axis, it indicates that the multi-headed forces are stronger than the short forces, and the stock price is in the rising or high consolidation stage.
3. When the MTM curve is below the zero axis, it indicates that the short position is stronger than the multi-headed position, and the stock price is in the falling or low position consolidation stage.
4. When the MTM curve starts to break through the 0 axis from the bottom of the 0 axis, it indicates that the stock market has become more powerful, and the energy of the stock price upward movement begins to be released, and the stock price will accelerate upward movement, it is a strong medium-and long-term purchase signal. Investors should promptly buy shares.
5. When the MTM curve starts to break down the 0 axis from the top of the 0 axis, it indicates that the stock market's short position is becoming more powerful, the stock price is more energetic, and the decline rate of the stock price will also increase, it is a strong medium-and long-term sales signal. Investors should sell all stocks or currency in the medium-and long-term periods in a timely manner.
6. When the MTM curve breaks through the 0 axis from below the 0 axis and moves up for a long period of time, if the acceleration of the upward movement of the stock price starts to slow down, it indicates that the multi-headed force of the stock market is weak, once the MTM curve starts to turn down, it indicates that the stock price will fall to the top, which is a strong short-term sales signal. Investors should sell all the stocks in a short time.
7. When the MTM curve breaks down from the top of the 0 axis and moves down for a long period of time, if the acceleration of the downward movement of the stock price begins to slow down, it indicates that the short position in the stock market is weak. Once the MTM curve starts to show up, it indicates that the stock price will rebound in the short term. This is a good short-term buying signal, and investors can start to build a small amount of warehouses.
8. When the MTM curve goes up and beyond the 0 axis, as long as the MTM curve does not turn down, it indicates that the speed and energy of the upward movement of the stock price can always support the rise of the stock price, which is a strong signal that the stock is about to rise, investors should firmly hold their shares until the MTM curve shows signs of turning down.
9. When the MTM curve breaks down through the 0 axis, as long as the MTM curve does not show its head up, it indicates that the energy of the downward movement of the stock price is still relatively large and it is a strong wait-and-see signal for holding currency, it is best for investors to hold the currency all the way and try to rebound as little as possible until the stock price stops falling up.

Ii. Use MTM curve with Stock Price Curve
1. When the MTM curve and the stock price curve rise from a low position, it indicates that the stock price is expected to continue to rise in the short term. Investors should continue to hold shares or buy at a low position.
2. When the MTM curve and the stock price curve decline from a high position, it indicates that the stock price will continue to decline in the short term, and investors should continue to hold the currency to watch or sell at a high position.
3. When the MTM curve fell from a high position, after a strong consolidation for a period of time, it rose up again and set a new high, and the stock price curve rose again after a strong consolidation, it indicates that the stock price is still strong, and investors can continue to hold shares to rise.
4. When the MTM curve drops from a high position, after a period of consolidation, the MTM curve goes up again, but it turns around near the previous high point, but it cannot create a new high, the stock price curve is still slowly rising and hitting a new high. The MTM curve and the stock price curve form the opposite trend at the high level, which may mean that the power of the stock price rise is getting weaker, MTM indicators have a top deviation. At this time, investors should be careful, once the stock price from the bottom, the results should be cut off in a timely manner.
5. When the MTM curve is falling in a long-term weak position, after a period of weak rebound, The MTM curve goes down again and creates a new low, while the stock price curve is also hitting a new low after the weak position is consolidated, it indicates that the share price decline momentum is still strong, and investors can continue to hold the currency.
6. When the MTM curve rebounded from the low position to a certain high position and fell down again, but the callback to the early low point to stop falling and stabilize, failed to create a new low, while the stock price curve is still falling slowly and creating a new low, the MTM curve and the stock price curve form the opposite trend at the low level, which may mean that the momentum of the decline in the stock price has begun to weaken, the MTM indicator shows a low deviation. At this time, investors should also pay close attention to the stock price trend. Once the stock price goes up, they can buy it in the short-term, waiting for the rebound.

Iii. Curve form of MTM indicators
When the MTM index is in the high position or the low position horizontal disk, the various forms also judge the market, which is a method of analysis that determines the sales action.
1. When the MTM curve forms a high position such as m head or triple top, it means that the rising momentum of the stock price has been exhausted, and the stock price may reverse for a long time, investors should sell shares in a timely manner. If the stock price trend curve has also appeared in the same form, it can be more confirmed. The magnitude and process of the stock price decline can be determined by referring to the m head or the three-heavy top and other top reversal forms.
2. When the MTM curve forms a low position, W low or triple low position Reversal form, it means that the decline momentum of the stock price has been weakened, and the stock price may build a medium-and long-term bottom. Investors can build warehouses in batches at low prices. If the stock price trend curve has also appeared in the same form, it can be confirmed that the rise of the stock price and the process can be determined by referring to the bottom W or triple bottom and other bottom reversal forms.
3. The accuracy of the reverse form on the top of the MTM curve is higher than that on the bottom.

Section 3 Special MTM Curve Analysis Method

In most stock market analysis software, the MTM indicator curve is composed of the MTM curve and mtmma curve, which have their own different analysis methods. In practice, we can set the analysis parameter of the mtmma curve to 1, so that the MTM indicator is composed of an MTM curve, and the method of analysis and determination is the same as the method described above, we will not discuss it here. In addition, we can also set the analysis parameter of the mtmma curve to 1, so that we can analyze the market through the intersection of the MTM curve and the mtmma curve. For example, the analysis parameters of the MTM curve in the daily MTM curve are set to 24 days and the mtmma curve is also set to 24 days. The main analysis method is as follows:
1. When the MTM curve and mtmma curve are sorted at the bottom for a long period of time, the MTM curve starts to run upwards, and the MTM curve also scales or increases slightly, which indicates that the momentum of the stock price increases, the long-term upward movement trend of the stock price is initially formed, and investors can start to bargain to absorb the stock.
2. When the MTM curve begins to break above the mtmma curve, it indicates that the rising momentum of the stock price is already quite sufficient, and the long-term upward trend of the stock price has been formed, if a large transaction volume is used together, investors should firmly buy stocks.
3. When the MTM curve breaks through the mtmma curve and runs for a period of time, it starts to callback downward and approaches or touches the mtmma curve. As long as the MTM curve does not effectively fall below the mtmma curve, both show that the stock price is a strong sort. Once the MTM curve is turned back, it indicates that the momentum of the stock price gathers again, and the stock price will enter the strong pull-up stage. Investors can buy stocks in time or hold shares to rise.
4. When the MTM curve and mtmma curve expand upwards at the same time, it indicates that the stock price remains strong and investors can stay up all the way.
5. When the MTM curve and mtmma curve run up for a long period of time at the same time, as the MTM curve run faster than mtmma and thus stay away from the mtmma curve, once the MTM curve turns down, this indicates that the amount of kinetic energy consumed by the rise of the stock price is too large, and the stock price has a short-term callback requirement. Investors should immediately increase their share price and reduce their share price.
6. When the MTM curve breaks through the mtmma curve from a high position, it indicates that the rising momentum of the stock price has been exhausted and the declining momentum has been accumulated, and the long-term upward trend of the stock price has ended, the long-term decline began to take shape, and investors should resolutely sell all stocks in a timely manner.
7. When the MTM curve breaks down the mtmma curve, the mtmma curve also begins to run downward, indicating that the decline momentum of the stock price is increasing and the long-term decline trend of the stock price is becoming increasingly obvious, investors should firmly hold the currency to watch or sell the remaining shares on rallies.
8. When the MTM curve keeps running down below the mtmma curve, it indicates that the weak characteristics of the stock price are extremely obvious. The only investment decision that investors can take is to hold the currency and wait and see.
9. When the MTM curve runs below the mtmma curve for a long time and starts to turn around slowly, it indicates that the decline momentum of the stock price is temporarily slowing down and the stock price is in a weak arrangement, investors should continue to observe and not take actions easily.
10. When the MTM curve begins to break above the mtmma curve below the mtmma curve, it indicates that the rebound momentum of the stock price begins to strengthen and the stock price will stop falling, investors can buy a small number of stocks to make a short-term rebound, but they cannot fight. Once the market goes down again, wait and see in time until the long-term decline of the stock price ends.

Section 4 practical MTM indicators

The MTM index is suitable for the analysis and determination of long-term investment in stocks. Its structure is also relatively simple. In most stock market analysis software, it is mainly composed of two curves: MTM and mtmma, the analysis and determination mainly focus on the intersection between the MTM curve and the mtmma curve ("Golden Cross" and "Dead cross") and the Operation direction of the two curves. In addition, some stock market analysis software MTM indicators are composed of an MTM curve. In this case, MTM indicators are mainly determined by the Operation direction of the MTM curve and the relationship between the MTM curve and the 0-Value Line. Next we will take the MTM indicators composed of the MTM curves on the 82 and the 77 days as an example to reveal the sale and wait-and-see features of MTM indicators.

I. Sales Functions

1. When the MTM curve of the 82-day and the mtmma curve of the 77-day have been sorted out for a long period of time, once the MTM curve of the 82-day begins to break above the mtmma curve of the 77-day, this indicates that the rising momentum of the stock price has been quite sufficient, and the medium-and long-term upward trend of the stock price has been formed. This is a medium-and long-term buy signal issued by the MTM indicator, especially for stocks whose share prices have exceeded the medium-and long-term average pressure and are accompanied by large transaction volumes, this buying signal is more verifiable. At this time, investors should resolutely buy stocks in full warehouse. (14-1.
2. When the MTM curve on the 82 day and the mtmma curve on the 77 day are consolidated at a high position, once the MTM curve on the 82 day breaks down the mtmma curve on the 77 day, it indicates that the rising momentum of the stock price has been exhausted and the falling momentum has begun to accumulate. The long-term rising trend of the stock price has ended, and the long-term declining trend has begun to form. This is a medium-and long-term selling signal issued by the MTM indicator, this signal is even more obvious, especially for stocks whose share prices have already exceeded the medium-and short-term average. At this time, investors should sell their shares at a high point in time. (14-2.

Ii. Currency Ownership Function

1. When the MTM curve on the 82 th breaks through the mtmma curve on the 77 th, if the two curves expand upwards at the same time, it indicates that the rising momentum of the stock price is quickly gathering, and the stock price will enter the strong and rising stage, this is a signal from the MTM index that stocks are waiting to rise, especially for stocks whose share prices are rising upwards based on the medium-and short-term moving average, which is more obvious. At this time, investors can hold shares all the way up. (14-3.
2. When the MTM curve on the 82 th reaches the 77 th mtmma curve at a high position, if the two curves extend downward at the same time, it indicates that the decline momentum of the stock price is gradually increasing, the stock price will enter the weak and gloomy phase, which is a wait-and-see signal sent by the MTM indicator, especially for stocks whose share price is suppressed by the medium-and long-term average, this currency holding signal is more obvious. At this time, investors should focus on holding currency and try to defend against the attack as little as possible.