Combine PowerRatings with our new Indicators
Today’s
PowerRatings article will look at how to combine our new 2-period RSI
indicator with PowerRatings to maximize our edge in the markets.Â
Click here to go to our new indicators page.
One of the most
popular technical indicators used by traders today is the Relative Strength
Index (RSI). RSI values range between 0 and 100, with 0 showing extreme
weakness and an oversold condition. Today we will focus on stocks with an RSI
below 2. These stocks have shown positive returns, on average, over the
next 1-day, 2-days, and 1-week later.
 Click
here for more detailed information on RSI research conducted by Ashton
Dorkins and Larry Connors covering over 7 million trades from
Jan 1, 1995 to
June 30, 2006.
Let’s take a look at the 2-period RSI below 2
list from Monday’s close:
Here are some individual charts of some of the
stocks listed above. The arrows show where the RSI readings have been
below 2 and also show the subsequent moves that some of these stocks have made
following the low RSI reading.
Cbeyond Inc.
(
CBEY |
Quote |
Chart |
News |
PowerRating)
On2 Technologies
(
ONT |
Quote |
Chart |
News |
PowerRating)
Greater China Fund
(
GCH |
Quote |
Chart |
News |
PowerRating)
Reminder: We are in no way recommending the purchase or short sale of these
stocks. This article is intended for education purposes only. Trading should be based on your own understanding of market conditions,
price patterns and risk; our information is designed to contribute to your
understanding.
From 1995-2005,
stocks with a PowerRating of 8 have outperformed the S&P 500
index on average by an 8.3-to-1 margin, while a PowerRating of 10 doubles that
performance to 16.3.
PowerRatings also help indicate a stock’s
downside as well as timely short-sale entry points; PowerRatings of 1 and 2 have
on average lost money over the next week. A PowerRating of 1 typically
underperformed the S&P 500 by a 5-1 margin.
PowerRatings provides an easy and powerful way
to find trading candidates.
Attend a free class on how to use
PowerRatings, presented by Steve Primo, our Director of Education.
Darren Wong
Associate Editor
Would you like to receive PowerRatings for full month for free? Send us your
PowerRatings strategy and if we accept it for publication, you will receive one
free month of unlimited access to PowerRatings. If you are already a monthly or
annual PowerRatings subscriber, you will receive an additional three months if
we publish your strategy.
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