Stocks & Commodities V16:7: Letters
Product Description
The editors of S&C invite readers to submit their opinions and information on subjects
relating to technical analysis and this magazine. This column is our means of communication
with our readers. Is there something you would like to know more (or less) about? Have you
run across trading techniques, services or products that have proved useful? Tell us about
it. Without a source of new ideas and subjects coming from our readers, this magazine would
not exist.
Address your correspondence to: Editor, STOCKS & COMMODITIES, 4757 California Ave. SW, Seattle, WA 98116-4499, or E-mail to editor@Traders.com. Letters published may be edited for length or clarity. The opinions expressed in this column do not necessarily represent those of the magazine. -Editor
VOLUME DATA AND RSI
Editor, I have always enjoyed your magazine. I hope that you can help clarify a couple points about the implementation of techniques presented in some of your past issues.
For indicators that are based on market volume, my question is, which source for volume information do I use? For example, do I use the NYSE volume reported on Yahoo! and PointCast, which may be different from the NYSE volume given in the San Jose Mercury News, which is different from the NYSE volume given in the San Francisco Chronicle, and so on? I am talking about differences of 100 million or more. What gives here?
My other question deals with the relative strength index (RSI). Can it be too high (indicating to sell rather than to buy) or too low (indicating to buy rather than to sell)? If so, what are some guideline values?
EJ RAIMONDI via E-mail
I cannot vouch for your various data sources. It may be that the newspapers are working under a deadline and are simply offering the last quote available before going to press. Since you have access to the Internet, I would suggest going to Data Broadcasting's Web site, http://www.dbc.com, and enter the symbol $TVOL in the "Get quotes" window.
Regarding how to apply the relative strength index, please see my November 1997 article, "Using Fibonacci ratios and momentum," which discusses calculating retracement levels using Fibonacci levels and momentum, as well as using RSI levels to define a trend. The fact is, when price is persistently trending up or down, there are no perfect RSI values. The market will stay overbought or oversold during a trend. -Editor
Address your correspondence to: Editor, STOCKS & COMMODITIES, 4757 California Ave. SW, Seattle, WA 98116-4499, or E-mail to editor@Traders.com. Letters published may be edited for length or clarity. The opinions expressed in this column do not necessarily represent those of the magazine. -Editor
VOLUME DATA AND RSI
Editor, I have always enjoyed your magazine. I hope that you can help clarify a couple points about the implementation of techniques presented in some of your past issues.
For indicators that are based on market volume, my question is, which source for volume information do I use? For example, do I use the NYSE volume reported on Yahoo! and PointCast, which may be different from the NYSE volume given in the San Jose Mercury News, which is different from the NYSE volume given in the San Francisco Chronicle, and so on? I am talking about differences of 100 million or more. What gives here?
My other question deals with the relative strength index (RSI). Can it be too high (indicating to sell rather than to buy) or too low (indicating to buy rather than to sell)? If so, what are some guideline values?
EJ RAIMONDI via E-mail
I cannot vouch for your various data sources. It may be that the newspapers are working under a deadline and are simply offering the last quote available before going to press. Since you have access to the Internet, I would suggest going to Data Broadcasting's Web site, http://www.dbc.com, and enter the symbol $TVOL in the "Get quotes" window.
Regarding how to apply the relative strength index, please see my November 1997 article, "Using Fibonacci ratios and momentum," which discusses calculating retracement levels using Fibonacci levels and momentum, as well as using RSI levels to define a trend. The fact is, when price is persistently trending up or down, there are no perfect RSI values. The market will stay overbought or oversold during a trend. -Editor
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