CCI 4 Strategy: Weekly CCI-4 Flags Overheated Markets

Next to RSI-2 My eyes are always around the CCI 4 strategy (CCI-4).

Unfamiliar with the CCI? Read this StockCharts.com primer. In a nutshell, CCI looks at how far an asset has diverged from its moving average relative to how far it “normally” divergences. CCI usually oscillates between +/-100, but will exceed those levels when the market makes a significant move.

Strategy rules: go long at today’s close when the 4-day CCI closes below -100 and exit that position when the 4-day CCI closes above 0. go short at today’s close when the 4-day CCI closes above +100 and exit that position whent the 4-day CCI closes below 0

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Weekly Shangai Composite Index-China

Weekly Nifty Index-Inida

Weekly Charts of Chinese Markets and Indian Markets shows overheated markets as Weekly CCI-4 is above 100. Also Weekly

RSI-2 of chinese market is at 98.2 shows extremety overbought markets.

Even Weekly charts of CCI-4 is above 100 shows that the rubber band of the Indian Market is getting overstreched. Possibly a Bear Trap for both chinese and Indian Markets.

Source:
www.marketcalls.in