SMH DualMomentum Signals (ROC + Volume)

SMH Dual Momentum (ROC + Volume Confirmation)

This indicator identifies high-quality bullish trends by combining price momentum (Rate of Change) with volume confirmation, and exits when momentum structurally fails.

Core Logic

BUY signal

Rate of Change (ROC) over N periods is above a positive threshold (strong upside momentum)

Current volume is above its moving average (rising market participation)

SELL signal

ROC crosses below zero, indicating loss of bullish momentum

Why It Works

ROC measures the speed and strength of price movement, filtering out weak or drifting trends

Volume confirmation ensures momentum is supported by real capital flow, reducing false breakouts

Momentum-based exit avoids prolonged drawdowns and capital stagnation

Key Advantages

Focuses on trend continuation, not prediction

Filters out low-quality price moves and range-bound markets

Captures long, high-conviction trends with relatively few trades

Simple, robust rules using only price and volume

Best Use Cases

Designed for trend-driven ETFs such as SMH (Semiconductors)

Suitable for swing to position trading on daily charts

Works best in markets with strong sector rotation and institutional participation

Notes

This is a trend-following momentum tool, not a mean-reversion indicator

No stop-loss is built in; risk management should be handled externally if required

Parameters can be adjusted to match different timeframes or assets