Tag: rsi

"Saturday Seminars" - Finding, Averaging & Forecasting Cycles in the Stock and Commodities Markets

Posted on by lindsay

Stan teaches you how to recognize, manage and make profitable use of cyclical movements in the markets. He shows you how cycles work with various formations. During his presentation, Stan integrates cycles with several common tools and technical studies such as the Relative Strength Index and Stochastics. The information derived from cycle studies gives the user an important factor to insert into the formulas in order to make the studies more sensitive and responsive. All stock, futures and cash traders will benefit from Stan’s presentation. His workshop will provide you with a greater understanding of cycles as useful timing tools.

PDF Workbook

Stan EhrlichStan Ehrlich graduated from Southern Illinois University in 1971 and joined Conti Commodities Services in the fall of that year. After trading for a few years, Stan invented the Ehrlich Cycle Finder, a physical, accordion-like device used to find cycle activity in any chart. The oldest mechanical technical analysis tool in the futures industry, the Ehrlich Cycle Finder can be used on all kinds of markets worldwide. Often quoted in publications such as Bond Week, Successful Farming Magazine, Crane Chicago Business Weekly, Futures magazine, and Stocks and Commodities magazine, Stan has also made numerous appearances on television and radio. Several technical analysis texts mention or detail the Ehrlich Cycle Finder. Stan has taught at dozens of investment seminars around the world, including several real-time trading seminars. In the past, Stan has worked with such well-known investment personalities as Jake Bernstein, Robert Prechter, and Robert Saperstein. Stan currently faxes a timely technical analysis market letter to his clients every few days.

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Saturday Seminars are just a taste of the power of INO TV. The web's only online video and audio library for trading education. So watch four videos in our free version of INO TV click here.

INO TV

Traders Toolbox: Relative Strength Index (RSI)

Posted on by lindsay

MarketClub is known for our "Trade Triangle" technology. However, if you have used other technical analysis indicators previously, you can use a combination of the studies and other techniques in conjunction with the "Trade Triangles" to further confirm trends.

Developed by Welles Wilder, the Relative Strength Index (RSI) addresses the two major flaws of momentum – the need to have a constant band against which to compare price movement and the ability to smooth the ebb and flow of price movement.

Sharp up or down movement 10 days ago (in the case of a 10-day momentum line) can cause pronounced shifts in the momentum line even if the current prices are relatively stable, giving false signals. Also, different commodities may have different “overbought” and “oversold” levels. RSI corrects these concerns by smoothing the movement and by creating a constant range from 0 to 100.

The formula for calculating RSI is as follows: RSI= 100-[100/(1+RS)] where RS= average of the days closing higher during the interval divided by the average of the days closing lower during the interval.

The RSI indicator is plotted on a vertical scale of 0 to 100. The general rule of thumb is overbought levels are at 70% and oversold levels are at 30%. When the reading of the indicator surpasses 70, an overbought conditions exists. An oversold condition exists with readings below 30.

Similar to momentum, a trader should look for bullish and bearish divergences to occur when trading with RSI. A 14-day interval is commonly used, but personal fine-tuning and experimentation always is needed.

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You can learn more about the Relative Strength Index by visiting INO TV.

Using Ratio Charts to Gain an Edge

Posted on by lindsay

Today’s guest blogger comes from Gary of Biiwii.com, a site that provides top notch analysis and commentary on stocks, currencies, commodities and bonds. I'm a frequent reader of the blog and HIGHLY encourage you to check out Gary's site for more analysis.

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Long time readers of the Biiwii.com blog know that I rely on ratio charts to the max. In fact, I find these ratios between different markets to be absolutely vital to being on the right side of the trade where macro themes are concerned. A recent example is the Dow/Gold ratio, which allowed me to navigate the oncoming - and entirely predictable - rally in stocks (both in nominal terms and in 'real' terms as measured in gold) that began in the fear filled days of March. Our April Letter from the main website, Reset/Recalibrate explained the process by which market sentiment needed to be reset. Here is the monthly ratio chart that was used in the letter:

Of interest now is the Gold/Oil Ratio, which appears to be in the bottoming process amid bullish divergence by RSI & MACD. This is an absolutely vital ratio to gold stock traders as oil is a major cost input to mining operations and with the likelihood of the ratio bottoming, gold miners' bottom lines stand to benefit as their product (gold) begins to outperform one of their major cost drivers (oil). Here is a current daily chart showing the status of the ratio. Gold, while having been pummeled in oil terms recently (along with nearly everything else), may well turn up from here in terms of crude:

I also routinely use the Gold/Silver Ratio to gauge general market confidence or lack thereof, along with more traditional sentiment indicators like the VIX and Put/Call Ratios. Other ratios which have appeared on the blog have included the S&P500/Nikkei Ratio, NDX/Dow and even SOX/NDX. All provide hints as to sentiment and/or macro-fundamentals and hence future market direction.

To summarize, you can trade any market but it is very important to be aware of the major trends and turning points between different markets and assets classes so that you may be aware of whether or not you are on the right side of the trade in the bigger picture. As traders and investors, we need every edge we can get.

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Read more Biiwii.com TA & Commentary by Gary at Biiwii.com