Thursday, July 15, 2010

When Extremely Overbought Barely Pulls Back

Below is one pattern I examined in last night's Subscriber Letter that had interesting results.



To qualify for the study the market first needs to be very overbought and then second it needs to pull back extremely gently. The 2-day RSI is such a sensitive indicator that any decent pullback – even from a very overbought condition – would normally see it close below 85. While the sample size is very small, historically this has always been followed by a pullback.

1 comment:

TAFT said...

Thanks for sharing

Is there a way to follow you on twitter or to get your posts to email?

Thanks
TAFT