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Technical indicators don't "predict". They are derivatives of price and/or volume, all of which accurately describe only what has already happened. But --always that distasteful qualifier-- because prices are merely chaotic, not random, trends do emerge in every time frame and do persist long enough to be tradable.

How long a trend will persist is anyone's guess. Therefore, what matters --as Raschke argues-- is identifying turning points (to know when to put on or take off a position). Everyone will have their favorite methods of identifying turning points, but here's the set-up I'm currently exploring.

Other oscillators could be swapped in for StochRSI. Other momentum indicators could be swapped on for PMO, and any of their look-backs could be changed. (But their signals won't change materially, as can be discovered when tested across a basket of tradables.) The price format could be changed as well. "It just doesn't matter," as someone once told Bolinger when he was started out. "Pick something, anything, and learn its best uses and limitations."

Now comes a practical application. Swine flu has been in the news, and I watched an ag video arguing that pig deaths will impact beef prices by this spring. COW is the ETF for livestock. Buying a long-dated call might be a good trade. But what's a chart say about the near-term timeliness of putting on a position?

I'd be late to the trade, right? So 'pass' for now. How about a long or short on fertilizer? Way too late again. How about silver? It's a real mess right how for a directional bet, but a bracketing, non-directional trade might be done.

STANDARD CAVEATS: Any tools, methods, or securities mentioned were for illustrative purposes only and not meant as investing/trading advice.
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