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Strategies & Market Trends : Technical Analysis- Indicators & Systems
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To: TechTrader42 who wrote (1676)6/20/1997 1:20:00 AM
From: Bill Sandusky   of 3325
 
Brooke,

Many folks here seem to be hung-up on crossovers or mechanical events and are missing the indicator action that occurs around key reversal points. Take a look at the various indicators and note how they respond in relation to changes in price. Is their action consistant? Predictable? If so, which indicators respond best? CCI(13) is a "leading" indicator (that's good) but its signals are often early (sometimes very early). If one trades on CCI alone, he/she will lose their shirt IMO. So some kind of "confirmation" indicator is required if CCI is to be successfully traded. Keep this in mind, NEVER trade on the basis of the action of a single indicator.

MACD(5,35,4) does an excellent job in confirning the action of CCI(13). It's a major componet of my CCI/MACD system. But the BradCCI and related indicators seem to allow me to enter and exit a trade a little sooner than before but with same or higher level of confidence. A pilot MUST have complete CONFIDENCE in his instruments and be able to respond appropriately to what he sees if he is to become an "old" pilot.. Much of what gives him this confidence is his years of experience. It's the same with TA. I spend much of my time looking at charts for patterns that repeat. Bressert's Redline Indicator (heavy Red on overlay) is an EXCELLENT overbought/oversold indicator. Notice its position when prices reverse. It makes some incredible calls. When the RL reverses the existing trend is over. Notice too what Brad1 (yellow line) is doing at these extremes.

The White line (Brad_SD) tends to indicate where price should be at any moment in time and can be used for predictive purposes as can the RL indicator. Brad1 (yellow line) gives us a constant picture of where the current price is in relation to its calculated value (White line). Finally, the Chaikin Oscillator (Magenta) considers volume (very important in my mind) and is most effective when it is at an extreme and opposite to Brad1. It's probably not being used as intended by Chaikin but seems to add an important element here.

Notice the relationship between Chaikin and Brad1 toward the end of May when price hit its high. Price seems to always follow Brad1 after such an occurence. When yellow is on top price subsequently heads lower. When yellow is on the bottom price inevitabily heads higher.

Please keep in mind that the BradCCI concept just came into being within the past couple weeks. Everything is still very much theoretical and subject to change. What I say tonight may not be appropriate tomorrow but I've seen enough to make me a believer in its potential. Know how difficult it is to try to evaluate something of this complexity with so little information. Will do my best to clear the air at TAINJ.

Best regards,
Bill

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