$$ Anti-Chick = The Dude

With a hat tip to The Big Lebowski, The Dude combines features from Linda Raschke’s “Anti” system, and “Chick” Goslin’s 3-point system (with a sprinkle of Andrew Cardwell's RSI methodology).

The elements of The Dude are:

Trend Line = 50-day simple moving average
Confirming Line = 10%D stochastic line
Timing Line = 7%K stochastic line and/or SMA3 of RSI3

In addition, Positive and Negative Reversals on the RSI(14) are incorporated. Courtesy of Mr. Cardwell, Positive Reversals occur when, despite greater downward momentum on a pullback during an uptrend, price cannot make a lower low compared to a prior correction. Negative Reversals occur in downtrends when, despite a higher high in the RSI(14), price cannot rally to a higher high compared to a prior downtrend rally.

Here’s how the chart looks with some explanations and an example of a Positive Reversal:


When the Timing Line (which is short term momentum) starts to change direction, an entry signal in the new Timing Line direction is given in three cases:

1. The Trend Line is pointing the same direction, AND

• The Confirming Line is sloping in the same direction as the Trend Line, OR
• Regardless of its direction, the Confirming Line's location is above 60 for new buy signals or below 40 for new sell signals.

2. Regardless of the Confirming Line's location or direction, the RSI(14) shows a Positive Reversal as the Timing Line turns up for a new buy signal, or a Negative Reversal as the Timing Line rolls down for new sell signal.

3. Regardless of the Trend Line direction, entry is signaled when the Timing Line turns up (down), AND

• The Confirming Line stands above 60 (below 40), AND
• The Confirming Line points in the same direction of the new Timing Line direction.

In a later post, I’ll discuss money management rules for The Dude.