Saturday, August 24, 2002 9:05:32 PM
Using other indicators
Again, let's start with a 3-year chart of QQQ for comparison purposes:
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1) Using the NASDAQ McClellan Summation Index:
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When this indicator rises above zero, it indicates an severely overbought condition and an impedding intermediate-term top. Similarly, when it falls below -1000, it indicates a severely oversold condition and an impedding intermediate-term bottom. Note, however, that the indicator can remain in overbought or oversold territory for a few weeks while the respective top or bottom is forming and the actual extremum of the indicator is not known until well after the fact. In order to facilitate the trading of this indicator, use a 20-day EMA of it and trade the cross-overs - Buy when the indicator crosses above the EMA after having fallen in oversold territory and Sell when it crosses below the EMA after having risen to overbought territory.
Regards,
Vesselin
Again, let's start with a 3-year chart of QQQ for comparison purposes:
1) Using the NASDAQ McClellan Summation Index:
When this indicator rises above zero, it indicates an severely overbought condition and an impedding intermediate-term top. Similarly, when it falls below -1000, it indicates a severely oversold condition and an impedding intermediate-term bottom. Note, however, that the indicator can remain in overbought or oversold territory for a few weeks while the respective top or bottom is forming and the actual extremum of the indicator is not known until well after the fact. In order to facilitate the trading of this indicator, use a 20-day EMA of it and trade the cross-overs - Buy when the indicator crosses above the EMA after having fallen in oversold territory and Sell when it crosses below the EMA after having risen to overbought territory.
Regards,
Vesselin
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