From the desk of Steve Strazza @Sstrazza
We want to be buying stocks that are in the strongest uptrends. One way we identify them is by looking at momentum which we use the 14-day RSI for. The strongest uptrends do not get oversold, or fall to RSI levels below 30. In fact, the strongest uptrends often stay above the 40-50 level and constantly print overbought readings above 70.
The S&P 500 registered an extreme oversold reading below 20 during the violent correction that began in late February. Here’s a look.