Scanning Technically

RSI Overbought/Oversold Scan

Arthur Hill | 

Here is a simple scan to identify stocks that are in long-term uptrends, but short-term oversold. The 200-day simple moving average is used to identify the long-term trend because it is a trend following indicator. A stock is in a long-term uptrend when above the 200-day and a long-term downtrend when below. RSI is used to identify overbought and oversold levels because it is a momentum oscillator. RSI is considered overbought when above 70 and oversold when below 30. 5-period RSI was chosen to insure an adequate supply of results. If so desired, a longer timeframe for RSI would result in fewer results. Results also decrease when the overbought and oversold levels are changed to 20 and 80, respectively. This scan, like all scans, serves as an alert for further chart analysis and due diligence. 



RSI Oversold Scan
• For the last market close:
• United States Stocks with...
• 20-day Simple Moving Average of Volume for today is greater than 40000
• 60-day Simple Moving Average of Close for today is greater than 20
• Daily Close for today is greater than 200-day SMA for today
• Daily RSI(5) for today is less than or equal to 30

RSI Overbought Scan
• For the last market close:
• United States Stocks with...
• 20-day Simple Moving Average of Volume for today is greater than 40000
• 60-day Simple Moving Average of Close for today is greater than 20
• Daily Close for today is less than 200-day SMA of Close for today
• Daily RSI(5) for today is greater than or equal to 70

The chart below shows Chesapeake Energy (CHK) trading above its 200-day simple moving average the last five months. Notice that 5-day RSI moved below 30 at least 10 times during this timeframe. The move below 30 signaled short-term oversold conditions, but there was no evidence of a short-term trend reversal. Waiting for 5-period RSI to move above 50 was used to signal a short-term trend reversal (green and red dotted lines). This reduced the number of signals to six, three were good and three were bad.

100309chk Click this image for more details.

 

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