To Members of the Tuna Board I received a few m
Post# of 2561
Posted On: 03/05/2016 4:08:15 PM
To Members of the Tuna Board
I received a few messages and requests over the last few days, and quite a few in the last two day, to address some of the technical indicators I use. What also was asked is probably due to the recently mentioned RSI as being a 'Power Zone' indicator.
You can read the following link from J Welles Wilder, who is the individual who developed the RSI. It is a very powerful article and explanation of the RSI and what typically follows for a stock once that indicator enters the Overbought level of 70+.
http://stockcharts.com/school/doku.php?id=cha..._index_rsi
It can be a slowdown in appreciation of the share price, a sideways consolidation, a gradual decline or an outright bear raid. Extreme situations do occur from time to time, but with a very high probability of the typical outcome, that's why I incorporate the use of the RSI with other indicators for a much higher success rate nowadays versus the days of past when I didn't understand momentum shifts and other such information found within the charts.
Those of you who have followed this board for some time now, absolutely understand that the RSI is a slow and lagging indicator. The RSI in the 70+ should not be viewed as the 'power zone' as an entry to enter a stock. There is no question that fundamentals will always trump the technicals. But mathematical and historical trading patterns are documented that the 'power zone' of an RSI at 70+ is rubbish. That's not to say one out of a hundred or more stocks will not continue higher. But those odds of success are greatly diminished by hanging on to a stock while the RSI begins trading at 70+, especially in cases when it increases to levels of 80 and 90+. Use the RSI in conjunction of other technicals, FullSto and MACDs, to make the huge portion of a move in a stock when the indicators are low and rising. It is extremely dangerous to enter an OTC security after a run and while the RSI is in the 'Nose Bleed' level of 70+ when that lagging indicator is screaming "Sell! Sell! Sell!"
I will share a few big board stock charts but quite a few more charts of the OTC. Rather than post them in successive posts, I will put them all in one message, so get ready to scroll down in that message.
I received a few messages and requests over the last few days, and quite a few in the last two day, to address some of the technical indicators I use. What also was asked is probably due to the recently mentioned RSI as being a 'Power Zone' indicator.
You can read the following link from J Welles Wilder, who is the individual who developed the RSI. It is a very powerful article and explanation of the RSI and what typically follows for a stock once that indicator enters the Overbought level of 70+.
http://stockcharts.com/school/doku.php?id=cha..._index_rsi
It can be a slowdown in appreciation of the share price, a sideways consolidation, a gradual decline or an outright bear raid. Extreme situations do occur from time to time, but with a very high probability of the typical outcome, that's why I incorporate the use of the RSI with other indicators for a much higher success rate nowadays versus the days of past when I didn't understand momentum shifts and other such information found within the charts.
Those of you who have followed this board for some time now, absolutely understand that the RSI is a slow and lagging indicator. The RSI in the 70+ should not be viewed as the 'power zone' as an entry to enter a stock. There is no question that fundamentals will always trump the technicals. But mathematical and historical trading patterns are documented that the 'power zone' of an RSI at 70+ is rubbish. That's not to say one out of a hundred or more stocks will not continue higher. But those odds of success are greatly diminished by hanging on to a stock while the RSI begins trading at 70+, especially in cases when it increases to levels of 80 and 90+. Use the RSI in conjunction of other technicals, FullSto and MACDs, to make the huge portion of a move in a stock when the indicators are low and rising. It is extremely dangerous to enter an OTC security after a run and while the RSI is in the 'Nose Bleed' level of 70+ when that lagging indicator is screaming "Sell! Sell! Sell!"
I will share a few big board stock charts but quite a few more charts of the OTC. Rather than post them in successive posts, I will put them all in one message, so get ready to scroll down in that message.
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