Relative Strength Index Chart for the S&P 500

The Relative Strength Index (RSI) is a widely followed market timing technical indicator, although it has become less accurate in recent years.  First introduced by J. Welles Wilder in his 1978 classic New Concepts in Technical Trading Systems, it uses a rather primitive algorithm by today's standards.  It is a form of momentum oscillator which compares the averages of the last 14 trading days' UP closes to the last 14 days' DOWN closes, measuring how quickly the stock or index has risen or fallen.  In theory, both high and low RSI values are unsustainable, and thus are used as overbought or oversold condition indicators in stock market timing systems.

This market timing system does find many unsustainable (reversal) points, but misses some major moves.  We expect the CrystalBull Trading Indicator will prove to be a far more accurate indicator for stock market timing and trading systems.