CCI (Commodity Channel Index)
The Commodity Channel Index, which can be used effectively for stocks, not just commodities, was developed by Donald Lambert. It is meant to decipher a stock's trendiness. The faster the indicator is moving the stronger the trend is, and if the CCI bounces around in a small range, it simply indicates the lack of a trend.
The CCI can be used as an overbought/oversold indicator. Readings above 100 imply an overbought situation and a possible pullback while readings under -100 imply an oversold condition and a possible reversal bounce.
The CCI can also be used as a divergence. If a stock makes a new high but the CCI fails to follow suite, a warning is given that a pullback is likely.
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