The Momentum tool gives a summary of the market participants' recent activity in a stock (i.e. uptick, downtick, refreshed quotes, etc.) In the past, one had to watch for a large number of red or green messages scrolling through a ticker to get a feel for the momentum of a stock. The Momentum tool can help remove this burden by counting the messages, separating them by stock, and displaying the overall "redness" or "greenness" of the data for each stock. As with any other tool or technical indicator, it the Momentum Tool should not be used as a sole means of investment research.
Reading the ticker tape is an old trading method. However this skill has traditionally been made difficult by three complexities. The first complexity is determining the movement potential of a signal (types of signals used in the Momentum tool are described at the bottom of this page). In other words, quickly deciding if a particular signal represents buy or sell pressure. The second complexity is separating intermingled signals of different stocks from one another. The third complexity involves the difficulty of accurately remembering the flow and direction of signals for extended periods of time, especially when multiple stocks are being tracked.
Basic price tickers were originally designed to simplify the first problem by color-coding the ticker data green or red to indicate buy or sell pressure. However, the separation problem and the memory problem still remained. The graphical tickers are designed to address these remaining two complexities. The tool tracks the incoming quote signals for a configurable period of time, separates the incoming signals by stock, and then displays the accumulated data.
It is important to understand what the momentum signals show. It is tempting to interpret these signals as showing price velocity or in other words, the speed and direction the price change of a particular stock. But that's inaccurate. The tool only shows the amount of price increasing (green) or price decreasing (red) activity that the market participants have been engaged in.
The Score combines a symbol's Activity Rate and Net Value (explained below) into a single strength value. Combining these values compensates for the unfavorable behavior of the Net Value on low activity stocks and allows the Score to give a much more reliable movement indication.
NOTE: Because the Score is a dynamic calculation, the score values in StreetSmart Edge® will likely not match the values shown in the Dynamic Ticker in StreetSmart Pro®.