A couple of observations...

Discussion in 'Trading' started by JJacksET4, Jan 15, 2011.

  1. Go to stockcharts.com and check the weekly QQQQ chart.

    The RSI is >75. The last time we were in this range was before the downturn late Apr into May of 2010. Of course, the market eventually turned higher again, but QQQQs fell >5 points and it wasn't til Oct that it was back over the Apr highs. Note that even with the rally through Oct, Nov, Dec, etc. we hadn't hit this level on the RSI weekly chart until now.

    Also, I was surprised by this, but the close of 57.00 on QQQQ appears to be the highest close since about Feb 2001! Even in the rally through 07, it didn't come back that much (it got to 55ish).

    So, we are at about 9 year highs on the QQQQs and the RSI would appear to show overbought for the weekly chart at least.

    I'm not saying things have to go down - I actually think earnings will be very important next week. Just some stuff to note while trying to determine the short and longer term market direction.

  2. The RSI can stay above 75 for longer than you can stay solvent.

    Regardless, Wilder's RSI is a crooked indicator. The original RSI is only at about 62. A lot of room to rise further and it may as well.
  3. Historically the second quarter after the mid term elections is not that good. So for the time being one might settle for paltry money market returns till later in the year. But ya know, it just don't feel right doing that.
  4. It would appear that the RSI for QQQQ on the weekly chart was unable to stay over 75 for even one week. (Lucious Sweet to Moe in the Simpsons "You couldn't even give me one round"!)

    When there are substantial overbought/oversold conditions, I feel they are worth paying attention to.

    And I have remained solvent so far :D