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Hi all,
As far as I know, the CDI is still a proprietary indicator but was
extensively discussed by Ms. Raschke at the Dow Jones Telerate 1994
Conference. When various ROC values converge and the market approaches a
state of equilibrium it is poised for a breakout. The CDI is a measurement
of that condition.
She points out that a similar result can be obtained by using a 3-10
oscillator with a 16 period moving average. I have personally found this to
be an excellent indicator particularly when combined with standard
deviation. When averages converge near the zero line and the standard
deviation is low this shows the market to be poised for a breakout
particularly following an NR7 day and/or ID/NR4 day. This is when she goes
into her "breakout mode" and will not fade the market.
Good Trading,
Pete Hallock
-----Original Message-----
From: Bob Hunt <RHunt.066@xxxxxxxxxxxxxxxx>
To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
Date: Tuesday, January 05, 1999 12:44 PM
Subject: Raschke's Critical Day Index
>During yesterday's free live commentary via IRC (the first day of
>every month is free), Linda Raschke mentioned her Critical Day Index.
>I've never heard of this before and was wondering if anybody else had,
>and if anyone had some ideas for constructing it.
>
>The extent of her comments are as follows:
> "This index measures when the absolute mean deviation for different
>momentum time frames approaches zero. The price behavior becomes
>quite erratic. Either an outside day or a trend day tends to be the
>outcome. It is just a funky thing to watch....telling you the market
>may be schizoid that day... Don't get signals that often."
>
>Apparently, the bond, cocoa and coffee markets all had Critical Day
>index readings going into trading on Monday, 1/4.
>
>After some additional inquiry, I was told that it was based on daily
>ROC.
>
>Any ideas are welcome!
>
>Bob Hunt
>
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