Avoid buying when Twiggs momentum hits the overbought region. Overbought / oversold levels are normally taken as approximately the same as +/- the chosen number of days for the period. An overbought signal followed by divergence may be a sign that the trend is coming to an end.
The indicator is proprietary to which I am not privy, however this gives very similar results.
**I have been doing some backtesting since I published this and in fact the best results seem to be achieved when the overbought line is used as a buy indicator..funnily enough this is how Mr Twiggs recommends to use it. I guess you want to get that signal early in the stocks run however, not after a couple of years' solid advance as seen with AAPL above. I get good results on SP500 & ND100 stocks using a 50 day period (more correctly it should probably be called lookback) and a buy threshold around 40 to 60, selling when crossing below zero. YMMV, DYOR :)
In true TradingView spirit, the author of this script has published it open-source, so traders can understand and verify it. Cheers to the author! You may use it for free, but reuse of this code in a publication is governed by House Rules. You can favorite it to use it on a chart.
study("Twiggs Momentum") tperiod=input(title="Period",type=integer,defval=50,minval=2) toverbought=input(title="Overbought",type=integer,defval=50,minval=1) toversold=input(title="Oversold",type=integer,defval=-50,minval=-9999) tlongperiod=2*tperiod tma=ema(close,tlongperiod) tmo=100*close/tma[tperiod]-100 h1=hline(toverbought,title='Overbought',color=gray,linestyle=dashed) h2=hline(0,title='Neutral') h3=hline(toversold,title='Oversold',color=gray,linestyle=dashed) fill(h2,h1,color=green) fill(h2,h3,color=red) plot(tmo)