Glossary: I
Inertia
The Inertia indicator takes its name from the realm of physics. Used to describe the tendency of a body in motion to stay in motion until acted upon by an outside force, here it is used to measure the momentum of a stock based upon its volatility. An outgrowth of Donald Dorsey's Relative Volatility Index, Inertia is simply a smoothed RVI. Dorsey introduced the idea of Inertia in the September 1995 issue of Technical Analysis of Stocks and Commodities.
Inertia is measured on a scale from 0 to 100. Negative inertia is seen if the indicator is below 50. If the indicator is above 50, it is said to have positive inertia. Signs of positive inertia are indicative of a long-term upward trend. Signs of negative inertia illustrate long-term downtrends.
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Intraday Momentum Index
Developed by Tushar Chande, the Intraday Momentum Index is a combination of the Relative Strength Index and Candlestick Analysis.
The IMI is calculated like the RSI but uses the relationship between the intraday opening and closing prices to determine whether the day is up or down. When the close is above the open, it is an up day. If the close is below the open it is a down day. White candlesticks signify an up day, black candlesticks used for down days.
As with the RSI, overbought conditions (and lower prices ahead) are indicated when the index rises above 70. Values below 30 indicate a potential oversold situation and higher price ahead. Remember, as with all overbought/oversold indicators, you should first quantify the trendiness of the market before acting on any signals.
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