The chart above shows the Relative Strength Line (RSI) based on the weekly price action. It shows the momentum of the market.
The reason why this is important is because momentum is usually a leading indicator of the market. So you are reading tomorrow's newspaper today. Sometimes is it just coincident but usually leading.
I have spent my career searching and researching to find leading indicators.
Notice when the indicator reaches the lower dark line at 30, the market skyrockets higher. Sometimes it doesn't quite hit the line but just comes close.
It works every time.
It also works great when the line goes above 70 as well. Not quite as good but pretty good.
Start paying attention when the indicator starts to get close to the 30 or 70 line like we had a week ago. Let's use this last week as an example. The line is plunging lower and approaching the 30 line. You now have to pay close attention.
What you are looking for is a sharp reversal up from the line. You can see that happened this week.
Usually this means that a significant rally is starting or about to start. On this chart, It worked great though it took a few stabs at the lows in 2018 before we got the final powerful buy signal.
The greatest example was in 2020 when the RSI dropped just below the 30 line and then started to skyrocket. I issued an alert to my clients when this happened at the time because is the such a powerful and reliable signal. The stock market then doubled in price! Great signal.
I believe that this week is another buy signal for the stock market. I don't think it will lead to a doubler like the last signal but I do believe it is a sign that the mini-bear that we have been in is over. I think we are back into the normal seasonal so this rally can continue to the end of April and maybe a little longer.
Thanks!
Good momentum trading,
Courtney Smith
COURTNEY SMITH WealthBuilder LLC Work (702) 761-6837 | Text Message (702) 718-8588 Support@WealthBuilderLLC.com CourtneySmith.com
1. Get your Option Strategy Guide and 7 Option Top Trading Tactics.Click here
2. Health is very important at this time. Ian Cooper has a new report and LIVE trade sheet to learn which are the BEST Health care, Pharma, Biotech, Insurance Companies. Click here
Post a Comment
Post a Comment