February 28, 2014 - Issue #726

In This Issue

1. Trading Article: RSI Indicator "Cornerstone" of Andrew Cardwell's Trading Model
2. Hot Market Review - U.S. Dollar Index Bears Gain Near-Term Technical Strength
3. Economic Calendar

1. RSI Indicator "Cornerstone" of Andrew Cardwell's Trading Model

The ideal technical indicator, according to Andrew Cardwell, Jr., is one that offers capability to identify and monitor the current trend, highlight overbought and oversold extremes, and give early warnings of a trend change.

“The Relative Strength Index (RSI) is such an indicator, offering the best of all worlds,” said Cardwell, president of Cardwell Financial Group, Inc., based in Woodstock, Ga. The RSI “is the cornerstone of my trading model,” he said.

Cardwell is a featured speaker at this weekend’s 20th annual Telerate Seminars Technical Analysis Group (TAG 20) conference here.

“In the lectures and workshops I have given, I have shown how the RSI can be used as either a completely independent trading model or an addition to and enhancement of a trader’s current technical approach. I use it as a completely independent model to identify trend, support and resistance, overbought/oversold levels, divergence, trend change, reversal and price targeting.”

Cardwell said most traders who use the RSI focus their attention on trying to identify bullish and bearish divergences. He said basic price and momentum divergence can and does help to identify extreme overbought or oversold conditions in market momentum.

“However, most traders fall prey to the concept of divergence and see it as the end or reversal of the prevailing trend of the market.

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2. U.S. Dollar Index Bears Gain Near-Term Technical Strength

From our friend Jim Wyckoff

Jim has an excellent daily newsletter where he reviews different markets, alerts you for potential trades and much more. Included is his great bi-weekly newsletter with charts and a little longer term outlook. We recommend checking out his website, educational CDROM, and services at www.jimwyckoff.com click on image below to enlarge

The U.S. dollar index is a basket of six major currencies weighted against the greenback. This index is an important "outside market" that impacts many other markets on a daily basis. See on the daily chart for the USDX that prices are in a choppy downtrend and have just hit a fresh 2.5-month low. The index on Friday was poised to close at a bearish weekly and monthly low close. The greenback bears have downside near-term technical momentum.

3. Economic Calendar

Source: Moore Research Center, Inc.

* Please note that the information contained in this letter is intended for clients, prospective clients, and audiences who have a basic understanding, familiarity, and interest in the futures markets.

** The material contained in this letter is of opinion only and does not guarantee any profits. These are risky markets and only risk capital should be used. Past performances are not necessarily indicative of future results.

*** This is not a solicitation of any order to buy or sell, but a current market view provided by Cannon Trading Inc. Any statement of facts herein contained are derived from sources believed to be reliable, but are not guaranteed as to accuracy, nor they purport to be complete. No responsibility is assumed with respect to any such statement or with respect to any expression of opinion herein contained. Readers are urged to exercise their own judgment in trading!