The SMI is interpreted the same way as the Oscillator. Extreme high/low SMI values indicate overbought/oversold conditions. A buy signal is generated when the SMI rises above -50, or when it crosses above the signal line. A sell signal is generated when the SMI falls below +50, or when it crosses below the signal line. Also look for divergence with the price to signal the end of a trend or indicate a false trend.
The was developed by William Blau and was introduced in his article in the January, 1993 issue of of Stocks & magazine.