OPINION: How can you identify when a market or stock is overbought? Look at RSI on a weekly (or daily) stock chart, Michael Sincere recommends.
While there are hundreds of stock market indicators and oscillators, most investors and traders only need a few. One of the most popular oscillators is RSI . Created by a brilliant engineer, Welles Wilder, RSI tells when an index or a stock is overbought or oversold. Like most “bounded” oscillators, it has a reading from 0.0 to 100.0 on the chart.
The purpose of RSI is to let you know if a market or stock is overbought or oversold and may reverse. It doesn’t mean that the security will reverse with 100% certainty, but it does indicate it’s in the danger zone. The screen shot was taken after the market closed on July 30. RSI as of the close on Aug. 6 rose to 71.1 on the weekly chart, which is extremely overbought. This doesn’t mean to sell everything but it does signal caution as stocks may reverse course — and soon. For comparison, the latest Nasdaq Composite COMP, +0.04% weekly RSI is 66.37 while the Dow Jones Industrial Average DJIA, +0.04% is at 66.31.
While some investment professionals preach that you cannot time the markets, in reality, a hard and fast plunge in RSI is an important tell, one that should not be taken lightly or ignored. Always confirm with other indicators before acting.
Deutschland Neuesten Nachrichten, Deutschland Schlagzeilen
Similar News:Sie können auch ähnliche Nachrichten wie diese lesen, die wir aus anderen Nachrichtenquellen gesammelt haben.
Heat waves aren't just scorching people, they are incinerating local businessesAs millions of Americans are under an extreme heat advisory, the heat wave is threatening worker safety and gutting traffic into stores, leading to a dramatic downturn in business.
Weiterlesen »
Santoli’s Friday market notes: Stocks grind through a sluggish week, but seasonal headwinds awaitNew for subscribers: Santoli’s Friday market notes: Stocks grind through a sluggish week, but seasonal headwinds await. Check out CNBCPro today.
Weiterlesen »
European markets flat as investors assess data, CovidEuropean markets were little changed Friday, as investors assessed global economic indicators and rising Covid-19 cases in the search for direction.
Weiterlesen »
Asian markets mixed as investors await on economic dataAsian stock markets were mixed Friday ahead of more regional economic releases that could hint at how the delta variant is affecting growth.
Weiterlesen »
Facebook's Giphy Deal Causes Competition Concerns, Says U.K. RegulatorFacebook’s takeover of GIF website Giphy raises competition concerns, Britain’s Competition and Markets Authority (CMA) said on Thursday.
Weiterlesen »
Foot Locker vs. Kohl's: Two traders pick favorites after stocks get analyst loveThe technical setup in Kohl's could take the stock back to its old highs, says Inside Edge Capital Management founder Todd Gordon.
Weiterlesen »