Kevin. On RSI and technical analysis
Some RSI thoughts ...extreme price movements create similar movement in the RSI to give "false" indications. Acting on the basis of a single move into an overbought (RSI greater than 90) or oversold (RSI less than 20) can often be premature. Usually the FIRST move into the extreme zone is a warning; even the SECOND move could be a false alarm. RSI is just an indicator, along with everything else like price movement, volume, moving averages, gaps, support, resistance, channels and the list goes on. I always look for confirmation or divergence among the indicators, simple concepts. So, when you post RSIs let us know if it is the first, second,... entry into the zone. That matters.
Example of other TA indications I use: momentum stocks should bounce off their 5-day mav ... if they do the momentum remains strong. Strong stocks also bounce IMMEDIATELY off their 50-day mav ... when there's no change in fundamentals and overall market conditions have driven them down. That's why the other day or so I said to michael and Abed that USRX should hike it back up to 85 and change. The 50-day mav for USRX is 85, which it violated on Tues when the NAZ was down 25 points. This AM USRX is making its way back to support ... exactly what a strong stock should do.
Catch you later. |
