Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
The Relative Strength Index (RSI) is a momentum oscillator that measures the speed and change of price moves. The RSI moves between zero and 100 and is considered overbought with a reading above 70 and oversold when below 30. Note the RSI can sustain an overbought (oversold) reading in a strong up (down) trend.
Hi bee. I've seen this chart and site before. Any idea of where the 30 and 70 guidelines come from...simply relative or based on historical precedent? Hope all is well. c
I find it interesting that Japan is already heading toward overbought territory as the category reached #1 returns YTD (even ahead of Health sector) and interest is rising in Japan funds. It may not be too late to buy in if you think it's a true bull market, in which case the RSI supposedly could reach as high as 90. Call me chicken, but I'm not going for it.
An example of a holding I own that remained overbought for a while (showing how overbought near 90 is not necessarily instantly actionable and can remain so for a while)
Reply to @joe74: It is nice rounds numbers but arbitrary in the end. It could as well be 25, 75. The number of days RSI is computed is also arbitrary. Statistical calculations to fit past data....
Comments
I find it interesting that Japan is already heading toward overbought territory as the category reached #1 returns YTD (even ahead of Health sector) and interest is rising in Japan funds. It may not be too late to buy in if you think it's a true bull market, in which case the RSI supposedly could reach as high as 90. Call me chicken, but I'm not going for it.
http://stockcharts.com/h-sc/ui?s=WPC&p=D&b=5&g=0&id=p70280104499