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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: Gottfried who wrote (47029)	5/19/2001 2:49:56 AM
From: Sam Citron	Read Replies (1) \| Respond to of 70976

Gottfried, Fascinating! I had just assumed that all relative strength indicators gave the percentile of other companies that were outperformed by a given security during a given time frame. I suppose this comes from my introduction to it as a user of Daily Graphs and later Investors Biz Daily. Thanks for pointing me to the definition of the Wilder RSI. Bigcharts apparently uses the same reflexive definition for RSI: RSI Relative Strength Index (RSI) is a momentum indicator which measures a security's price relative to itself and its past performance, thereby indicating its internal strength. RSI quantifies price momentum. It depends solely on the changes in closing prices. RSI is less affected by sharp rises or drops in a security's price performance and, therefore, may give a better velocity reading than other indicators. RSI is calculated by taking the average of the closes of the up bars (the up frequency intervals) and dividing them by the average of the closes of the down bars. The time frame specified determines the volatility of the indicator. For instance, a 9-day time period under study will be more volatile than a 21-day time span. The RSI ranges between 0 and 100. RSI is said to indicate an "overbought" condition when it is above 80 and an "oversold" condition when it is below 20. However, the buy and sell level varies depending on the amount of bars used in the calculation. A shorter span of bars will result in a more volatile indicator which reaches further extremes. A longer amount of bars used in the calculation results in a less volatile reading which reaches extremes far less often. The RSI indicator in BigCharts references the following default parameters: Length: 14 Bars The bold reference is highlighted for emphasis because it certainly has proven true in AMAT's case that it was overvalued and soon reversed when RSI>80. But it looks like AMAT has never traded at RSI<=20 and has not broken below 40 since 1975. [based on Bigcharts monthly AMAT RSI chart; sorry I cannot figure out how to provide the link] Sam