The Power of the RSI

As long as the lows hold, the bottoming thesis is in effect. I have focused on more short term 3-6 month charts lately, but here is a two year chart showing the power of the oversold Relative Strength Index, even in a longer term down trending "topping" market.

click to enlarge

Comments

[Carl Spackler:]

Put your money where your mouth is - Go buy and post your buy order for $200,000 of SSO tomorrow at open if you think this is the bottom. By your chart above, there have been 6 buy signals in the last 2 years, and each would have been a big loser, but keep calling for the bottom - sooner or later you will be right!

2008 Oct 27 05:19 PM

[Augustus:]

Carl Spackler,
You do not understand the trade.
Buy the SSO when the RSI breaks under 30.
Hold until above 50 and sell if it breaks below that.
You might run the winner / loser evaluation again.

2008 Oct 27 07:59 PM

[Carl Spackler:]

I agree that this may work in a more trendless market, but you never try to jump in front of a train.

2008 Oct 27 11:51 PM