Page 3 of 16

Wilder’s RSI Oscillator, Revisited and Updated

New Concepts in Technical Trading Systems, originally published in 1978 by J. Welles Wilder, is an excellent book to dig into technical analysis. One of Wilder’s most well known indicators is the Relative Strength Index (RSI).

The RSI is an oscillator that measures the velocity of directional price movement. When it moves up very quickly, eventually it will be considered overbought, the opposite for oversold. In these scenarios, a reversal may be forthcoming. In addition, the RSI is often used to view areas of divergences.

Here’s how Wilder defined the RSI:

RS = Average of 14 day’s closes up / Average of 14 day’s closes down

RSI = 100 – (100 / 1 + RS)

Continue reading

RS Line at New High Before Price

In the latest release of my RS Line indicator for TradingView, I’ve added support for a visual callout when the RS Line has reached a new high before the stock price is at a new high.

Historical research of past big winners has shown that an RS Line at a new high before the price reaches a new high, may proceed a significant move up. This very bullish signal is now much easier to identify.


Examples of New High Callouts

There are two visual callouts that have been added to the RS Line indicator. First is the RS Line hitting a new high before the price hits a new high. Here’s how the indicator looks when RS Line is at a new high before the price, the example is from EBay in 2003.

Continue reading

RS Line Indicator for TradingView

I’m a huge fan of Investors.com MarketSmith charting application. Their implementation of a Relative Strength Line (RS Line) is my go-to indicator.

In MarketSmith, the RS Line represents a stock’s performance versus the S&P 500. If you are looking at a weekly chart, the RS Line is the performance of the stock over the past week versus the S&P 500 over that same time frame. The same logic applies to the daily and monthly charts, only the time frames are different.

If a stock moves up for the day/week/month and the S&P 500 does not, the RS Line will move up. If a stock ends the day/week/month flat, yet the S&P 500 moves up, the RS Line will go down.

Continue reading

3 Weeks Tight Indicator for TradingView

3 weeks tight is a bullish continuation pattern first documented by IBD’s founder, William O’Neil.

The pattern can used as an opportunity to add to an existing position as it often occurs after a breakout above a cup with handle or other technical pattern.

Head over to TradingView to install the Three Weeks Tight indicator

The 3 weeks tight pattern forms when a stock closes within approximately 1% to 1.5% of the prior week’s close for at least two weeks. The reason for the bullishness is that it indicates that investors who moved the stock upward in price since the breakout are not taking profits, the price is holding steady.

The buy point is just above the area of resistance formed at the highs of the three weeks plus 10 cents. The ten cent addition to the price is to ensure a push through the resistance at the high of the range.

Continue reading

RS Line vs RS Rating – What’s the Difference?

A common question regarding MarketSmith: what is the difference between the RS Line and RS Rating?

I originally wrote a short post describing the differences (see below). The video tutorial that follows provides some additional insight as well as highlights several examples on how to use both indicators when scanning for growth stocks.


Continue reading

How to Trade Like an Investing Champion – Annotated Chart

Investor’s Business Daily recently hosted a webinar How to Trade Like an Investing Champion. The moderator, Irusha Peiris, was joined by U.S Investing Champions David Ryan (1985, 1986 and 1987) and Mark Minervini (1997). This is an excellent webinar to get insight into how these award winning traders analyze both the market and stock setups.

Continue reading

Divergence and True Market Leaders

One sign of a potential true market leader is when there is a divergence of the stock’s price action versus the overall market. In this post I’ll show several examples where the S&P 500 was moving down while a stock was moving up, preceding a large gain over the coming months.

As with any technical or fundamental indicator, divergence is no guarantee of upward price movement. However, as you’ll see, divergence may be foretell a winning stock, one that can make a significant move higher.

Continue reading

Webby’s RSI for TradingView in Pine Script

Webby’s RSI (really simple indicator) is a technical indicator to gauge the health of an uptrend. The concept of Webby’s RSI and the original implementation was created by Mike Webster. In this post I’ll share a Pine Script version of Webby’s RSI that you can use on TradingView.

Webby’s RSI, most often used with the Nasdaq Composite, is the percentage of the low vs. the 21-day moving average. At the beginning of a bull market, the higher the value, the better.

If you are familiar with TradingView and would like to install the indicator, you can find Webby’s RSI here.

Before we get into the code, here’s how Webby’s RSI looks as originally developed by Mike:

Continue reading