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August 17, 2006

The downside of a falling RSI, Thurs., Aug. 17, 2006, 2:34 PM

This afternoon, the RSI on the high-beta NDX (Nasdaq 100 big cap issues) hit 94 and then turtled. As expected. It is now 53, so let's see how low can it go.

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Note: I have to leave (the office :-) ) now. Back at 4:00pm.

Posted by Posted by Bill Cara on August 17, 2006 02:34:09 PM | Category: Cara Today in the Market

Discourse

Looks as if the QQQQ fell off starting 13:25PM but then turned back up at 14:30PM.

Posted by: Jock [TypeKey Profile Page] at August 17, 2006 3:57 PM [link]

Aloha!
According to the P&F Chart of the NDX 100 had a double top breakout on the 15-August, has cleared its bearish resictance line, it would give a sell signal when it breaks the 1470. So, cautious optimism to hold this line.

Posted by: procontra [TypeKey Profile Page] at August 18, 2006 6:15 AM [link]

Bill,

Just wondering, do the hourly RSI on such indices ever go higher than that?

I have seen it higher with individual stocks (Currently ebay has the hourly rsi at over 95 for example), but theoretically can it not go to 100 on sustained very good news?

Thank you.

Posted by: SiO2 [TypeKey Profile Page] at August 18, 2006 8:21 AM [link]

SiO2,

From experience, the higher the Hourly RSI 7 goes, relative to its past cycle highs, the more likely that prices will not reach that high again for at least several weeks.

If it's the Daily RSI 7 that peaks, relative to its past cycle highs, then I believe that the subsequent price high will not be at that level for a couple months.

And if it's the Weekly RSI 7, the time horizon would be a year or more.

Posted by: Bill Cara [TypeKey Profile Page] at August 18, 2006 8:50 AM [link]