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Strategies & Market Trends : Technical Analysis- Indicators & Systems
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To: Bruce A. Bowman who wrote (1626)6/17/1997 8:15:00 PM
From: Bill Sandusky   of 3325
 
Bruce,

Thanks for your illustrations. Understand what you're saying. Don't remember now what chart I sent you but will talk in generalities about the overlaid indicators. First, it's not necessarily the crossings that are of prime importance. Let's start with the Yellow (Brad1) and White (Brad_SD) indicators. Think of them as 5-dma and 13-dma moving averages. When Yellow (5-dma) is on top, price is above its theoretical present value (White) and things are generally bullish (relatively speaking) or moving in that direction. When Yellow (5-dma) is below the White(13-dma) things are generally bearish or again, moving in that direction. The White line is the target price for any point in time. Resulting spread might be indicator of momentum and/or considered degree if risk. Probably clear as mudd? Keep in mind, I'm still trying to formulate all this myself as I only recently discovered its usefulness.

The RedLine indicator is an extremely sensitive overbought/oversold indicator and provides extremely valuable information. Reversals in this indicator tend to signal an immediate change in trend. It becomes VERY powerful when Brad1 contacts the RL , especially at an extreme position, and even more powerful when joined by Brad_SD. It's been my experience that when the RL reverses (changes direction) the current move is over regardless of the position of other indicators.

Best use of the Chaikin Oscillator (Blue) comes when they are at extremes. This frequently occurs at reversal points. Price action tends to follow Brad1 (Yellow). The oscillator is NOT used in the way Chaikin originally intended. <g>

I continue to use CCI(13) as a primary early indicator to alert me what's ahead. Hope all this has helped rather than confuse.

Bill
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