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David and Dan,
The CMO and the RSI remind me of Chihuahuas on "crack". Notice the nervous
energy they constantly giving off as they move up and down. I get whiplash
just looking at them. I discovered rsi in the late '70's and have used it
in many forms over the years. I hardly ever look at it anymore. Today,
there are better momentum indicators out there (and you can build one of
your own). If you want sensitive indicators that react to trend changes,
yet are smooth as a baby's butt...try: Linear Regression Slope, Stochastic
Momentum Indicator, or the True Strength Indicator for starters. The
Kaleidoscope is a hybrid of a number of momentum oscilators with "tweaked"
mystery numbers. I sell it for a bazillion dollars or for half the salary
of a second basemen carrying a .249 average (which ever is more). It
beats getting whiplash and trying to interpret drug addicted, little
barking dogs.
Steve Karnish
CCT
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From: David Walton <stocknet@xxxxxxx>
To: 'metastock@xxxxxxxxxxxxx'
Subject: RE: CMO Insight
Date: Thursday, December 03, 1998 8:08 PM
Yes, that was very useful, thank you. I have been reading that book
"Trading With Oscillators" by Mark Etzkorn (recommended by this list -
thanks) and I am choosing which momentum oscillator is best. Clearly RSI
has classic momentum beat, but I'll study CMO more closely now.
David Walton
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From: HARELSDB@xxxxxxx[SMTP:HARELSDB@xxxxxxx]
Sent: Thursday, December 03, 1998 9:29 PM
To: metastock@xxxxxxxxxxxxx
Subject: CMO Insight
I have been trading with a system that gives signals based in part on
Welles
Wilder's Relative Strength Index (RSI). I have also been carrying along a
plot of the Chande Momentum Oscillator (CMO) with my charts, but, I wasn't
sure why. The CMO is very closely related to the RSI and I wasn't sure
that
it was giving me any additional information. I have gained a new insight
recently and thought it might be of interest to the list.
The CMO seems to show divergences more clearly than the RSI. For example,
on
a daily plot of the S&P 500, a plot of the RSI does not show momentum
diverging from price. That is, the recent higher high in price was
accompanied by a higher high in the RSI. In contrast, the CMO very clearly
shows a lower high associated with the recent higher high in price. I have
been using 20 days for the periods for both the RSI and the CMO. In
addition
to the S&P 500 index, I have found this pattern where the CMO shows a
divergence and the RSI does not, or does not show it as clearly, on a
number
of securities in the last few days.
I hope this is useful.
Dan
Pocatello, ID USA
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