If you are good at reading indicator patterns the CCI is just fine. Although, I do know a handful of profitable traders (one was profiled in a magazine and is one of the larger fixed income traders on planet earth). None use it for OB/OS per se. They are good pattern readers and like any good pattern reader the Momentum indicator becomes a crutch to tell them what NOT to do. Woodies patterns are NOT necessarily Woodies patterns. Those have been around a long time. Guys that use the old school 3-10-16 simple MACD also use similar patterns. They came about in the 1950's and the CCI is a more modern adaptation. The Strength of the CCI (or macd) is that they do not have a tight ob/os range like that of a stochastic. Ultimately, price rules and indicators are like guides.
Buying QQQQ at "oversold" CCI levels might be the basis for a decent reversal system, but it is hard to avoid those whipsaws.
A while back I coded the ZLR pattern from a Woodie approved document that was very specific... can't find the document but here's how it backtests on 1500 stocks from 2000 to 2005. P.S. I recall the tone of the document being VERY cult-like... basically, don't do any thinking on your own because Woodie has already done it all for you. It never ceases to amaze me how many people need a guru.
Geez Trader, is that chart sideways??? <img src="http://www.elitetrader.com/vb/attachment.php?s=&postid=1203203"/>
If you lurk in the room, you will get the impression that every day is a winning day. Almost every trade is either a tiny loss or a decent to huge win. Yes indeed, life is good in CCILand. If nothing else Woodie gets to travel a lot, meet lots of people and say We Have No Problems 200 times a day. He does appear to give to charity , so you have to give him kudos for that.
If you trade the CCI, then you're the kind of person who wants to run in the same direction as a moving train to catch it before it picks up too much speed to make that possible. If you don't trade the CCI, then you're the kind of person who has figured out how to walk onto the train and take your seat just before it has reversed course. The fallacy of the first group's thinking is that they believe their risk of failure is less and their probability of success is greater than the second group's method of catching trains. Nothing could be further from the truth.
Woodie is a savvy old time trader that probably doesn't realise his success is due less to CCI than to experience, otherwise everyone using his method would have his success Winning systems are a dime a dozen Winning traders are rarer than rocking horse shit