ajtj99's Market Pulse

[Vestor_2000]

RSI 5 Questions

PT, I need your assistance. Please bear with me.

For those of us who attempted the RSI 5 play the other day (I tend to trade the S&P 500, but will reference the NDX here), we got a nice run. At this point, the NDX RSI 5 stands at 46.9 (coincidently, it gave us a nice positive divergence on the daily chart the day before the rally). The MACD for the NDX is turning up ever so slightly. This is the good news.

However, the NASI is on a sell signal. It stands at 87.25. The EMA 5 is 123.95 and the EMA 24 is 124.7; both are pointing down.

Now, my question is: what happens next? If you followed the VTO or VTO Modified, you would sell at RSI 50 if we closed there today. On the other hand, if the MACD continues to turn up, you might also let your trade run.

Still, there is the matter of the NASI, which is declining.

Okay, you see where I am going with all of this. How do these pieces fit together? Does the RSI 5 take precedent, or do you play it cautiously because of the NASI and sell if the RSI 5 hits 50 by the close?

I hope what I am writing here makes sense, because this is where I continue to have problems with my trades. How would you play the scenario before us?

Many thanks for your patience.

Rich