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Friday, 19 Jan 2018
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Scary Stuff

I don’t want to scare you but have you seen a chart of the Dow Jones or the S&P 500 index recently. The RSI or “Relative Strength Index”, a technical indicator used by chartists to measure the speed and change of price movements, is at record highs.

In the technical world the RSI goes from zero to 100 and if a stock has an RSI below 30 it is described as “oversold”, and if the RSI is over 70, it is described as “overbought”.

Whilst individual stocks are quite volatile and can regularly appear as oversold and overbought, an index like the S&P 500 index, which represents the average of 500 stock prices, is, by definition, not volatile and rarely becomes either oversold or overbought.

At the moment the RSI for the

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