The RSI Zone: Update 7 December 2015

Monday, 7th December 2015 08:48 - by Moosh

So now we’ve established that the RSI (relative strength index) oversold position could be considered as a possible entry position, we enter the RSI zone where companies which have recently dipped to a daily RSI oversold position will be highlighted.

Since these will still be in stage 1 of a trend I will also mention an incubation time (as it stands currently, also referred to as dormancy period) which one must hold for before stages 3-4 are likely to appear, then it’s your choice whether you are willing to buy and hold for that length of time or not.....and even if you don’t, there may be other investors/traders sitting on the sidelines (sideliners) waiting for the RSI oversold position to hit before they take up residence. After all, the easiest money to make if you are a trader is on the RSI oversold-overbought swing, which should unfold over the four stages of an uptrend.

Today I issue an RSI Zone update for previous RSI Zone contenders as well as new entrants to the zone:

Proton Power Systems (PPS) – this is currently in dormancy for another 9 weeks.

Empyrean Energy (EME) – this is currently in dormancy for 6 weeks.

Asiamet Resources (ARS) – this has virtually touched the RSI oversold position so I include this as a new contender today. Unfortunately much of the recent news flow appeared during the RSI relaxation time so it’s really no surprise that the market didn’t respond to any of it, even after the placing. Currently the dormancy period for ARS is 9 weeks.

Software Radio Technology (SRT) – SRT has dipped into the RSI Zone a number of times over recent months, despite all the ‘jam tomorrow’ news that crops up. The price is currently in dormancy for another 9 weeks so you can figure out where you stand with it based on this. In March 2016, there is the USCG deadline which investors may get rallied up for as this may provide a reason to buy for those with a short attention span and that should time well with the end of the dormancy period.

I am waiting to invest in any of the above if any positive developments appear before the end of their current dormancy periods and if the market receives any news with gusto such that a new 4 stage uptrend appears – I will know when I see it, and then I’ll let you know.

A recent example of how positive news developments can shorten the dormancy period is with Beximco Pharmaceuticals (BXP). Prior to the recent US FDA approval of the cardiovascular drug, carvedilol, BXP was in a state of dormancy for7 weeks. However, once the market heard this latest development and decided it was a good thing, it completely wiped out the 7 week dormancy period and entered a new uptrend and the price has recently continued up from 19.75p (pre-news) to as high as 27.5p this last week.

So I continue to wait keenly to see what surprises any of the above companies (positive surprises I hope!) have in store for us which may have the effect of dramatically shortening their current dormancy periods to kick start a new uptrend from an oversold RSI position. That’s the task for them.