Persistent Overbought RSI - Bullish:
When RSI remains persistently overbought, it is a bullish sign. If RSI closes 5 consecutive days above 75, historically, it implies the market will close higher in the ST. Tuesday, the RSI closed above 75 for the 5th consecutive time on the Nasdaq.
Here are some results of back testing this that shows this is a very tradeable signal:
Since it’s inception, the QQQQ has closed higher 10 out 12 times 4 days later.
Since 1995, the Nasdaq has closed higher 26 out 32 times 3 days later.
Note: even on some of the lower closes, the index made a higher close within the N days specified…but for testing, I used a constant value for N (4 for QQQ and 3 for Nasdaq)
Ticker Date/Time RSI Close Close N % Price Chg
QQQQ 11/5/1999 89.19 67.45 70.48 4.49
QQQQ 12/23/1999 89.97 89.25 90.51 1.41
QQQQ 8/30/2000 77.51 97.80 94.96 -2.90
QQQQ 3/20/2003 78.46 26.51 26.27 -0.91
QQQQ 9/2/2003 93.11 33.50 34.13 1.88
QQQQ 1/12/2004 84.40 37.93 38.17 0.63
QQQQ 6/2/2004 76.34 36.04 36.71 1.86
QQQQ 11/9/2004 81.60 37.53 38.43 2.40
QQQQ 5/23/2005 93.44 37.82 38.17 0.93
QQQQ 7/18/2005 76.48 38.73 39.42 1.78
QQQQ 11/10/2005 87.98 40.60 40.77 0.42
QQQQ 11/23/2005 92.19 41.80 41.80 0.00 (Open)
Ticker Date/Time RSI Close Close N % Price Chg
^IXIC 2/10/1995 90.71 790.43 795.63 0.66
^IXIC 6/20/1995 95.68 929.83 938.87 0.97
^IXIC 7/12/1995 85.8 988.63 1005.89 1.75
^IXIC 9/12/1995 85.27 1065 1051.1 -1.31
^IXIC 2/6/1996 92.58 1089.08 1094.6 0.51
^IXIC 4/25/1996 93.26 1184.17 1190.52 0.54
^IXIC 5/17/1996 90.76 1241.88 1247.38 0.44
^IXIC 9/19/1996 92.83 1212.09 1215.27 0.26
^IXIC 12/5/1996 78.52 1300.12 1312.55 0.96
^IXIC 5/7/1997 75.63 1322.91 1344.19 1.61
^IXIC 5/28/1997 89.8 1410.18 1404.79 -0.38
^IXIC 7/11/1997 91.18 1502.62 1580.63 5.19
^IXIC 8/6/1997 92.21 1630.44 1586.74 -2.68
^IXIC 2/4/1998 91.07 1680.44 1690.43 0.59
^IXIC 6/30/1998 82.64 1894.74 1909.47 0.78
^IXIC 7/15/1998 92.78 1994.54 2014.25 0.99
^IXIC 11/4/1998 84.73 1823.57 1861.05 2.06
^IXIC 11/24/1998 84.02 1965.88 1949.54 -0.83
^IXIC 1/11/1999 95 2384.59 2276.82 -4.52
^IXIC 7/8/1999 86.95 2771.86 2778.23 0.23
^IXIC 11/4/1999 92.34 3055.95 3125.04 2.26
^IXIC 12/10/1999 85.51 3620.24 3621.95 0.05
^IXIC 12/23/1999 91.69 3969.44 4041.46 1.81
^IXIC 8/30/2000 87.92 4103.81 4143.18 0.96
^IXIC 11/19/2001 89.53 1934.42 1903.2 -1.61
^IXIC 6/3/2003 83.2 1603.56 1627.42 1.49
^IXIC 9/3/2003 94.31 1852.9 1888.62 1.93
^IXIC 1/9/2004 78.92 2086.92 2111.13 1.16
^IXIC 6/2/2004 81.71 1988.98 2020.62 1.59
^IXIC 11/9/2004 91.62 2043.33 2085.34 2.06
^IXIC 5/24/2005 91.65 2061.62 2075.73 0.68
^IXIC 7/15/2005 88.77 2156.78 2188.57 1.47
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