Replies to post #463 on The Black Box

[TREND1]

wahz
(1)I have studied that chart of $BPCOMPQ vs RSI(14)
back testing to 1996.
(2)YES. The RSI(14) says bottom at hand.
(3)But some times it takes awhile and even has a second
dip a few weeks later.
eg: July 2002 and Oct 2002 with a small rise in Aug 2002.
(4)TTT Things Take Time.

[gottfried]

wahz, look at June/July 2002: RSI stayed below 30 for two months while bp went lower and lower [from 45 to 26].

Gottfried

[wahz]

well the rsi(14) didn't get this low last summer.Nor was it under 30 for this long.

This is the longest and deepest rsi(14) reading of the entire bear, on the bpcompq.

But hey, maybe we need capitulation,always more capitulation.

And for that matter I'll take a similar bounce to August. The q's would tag 27.20 which is exactly what i think is going to happen

[Chris McConnel]

Wahz,

if the RSI falls below 30, wouldn't you wait for it to move back above 30, before generating a buy signal?

[augieboo]

wahz, I find it helpful to use a longer RSI and/or a really long Stochastic-RSI with the BP Indices as they provide a much better "curve fit."

Example:

[Dick Weigel]

wahz, I think that it's human nature to want to place too much emphasis on one (or many) indicator(s), whether that be RSI, VIX or a host of others. Ultimately, the market itself has to tell us what to do. Gary Smith in "How I trade" makes note of how indicators have failed often through the years and how the final arbiter for him is the market action itself. Speaking from experience, it is tough to put into practice and periodically the market has to wake me up with a figurative two by four by showing that a cheap price can be made cheaper and a dear one moreso. Not preaching here, just showing empathy.