Trend Alert! With The CCI by Martin Boot
The trend is your friend — or is it?
How do you know when a trend has turned
against you? There are only so many
indicators that can alert you. Among
them, one of the most helpful is the
commodity channel index (CCI). Introduced by Donald
Lambert in 1980, the CCI is a price momentum indicator
that measures a security price’s variance from its
statistical mean. It is commonly considered useful in
determining the beginning and end of a trend.
It does so effectively, but it can also be used in
another way. When I was engaged in a major research
project involving statistical analysis of more than
8,000 NYSE/Nasdaq stocks over a five-year period, I
tested well-known technical indicators as well as
technical patterns. The results were intriguing.