This Relative Strength Index (RSI) stock scan allows investors to search for specific stocks that have recently had the RSI technical indicator break through various different oversold and overbought levels. The RSI technical indicator compares the extent of a stock's recent gains to the extent of its recent losses and converts that information into a number that ranges from 0 - 100. Technical stock traders suggested using 70 and 30 as the overbought and oversold levels respectively. The 50 level is considered the mid-way point and readings below 50 generally are bearish while readings above 50 are generally seen as bullish for a particular stock. Outside of the ability to pick which RSI filter you prefer, investors are also able to filter results by exchange, price and volume.
More information on RSI:
The RSI technical indicator compares the extent of a stock's recent gains to the extent of its recent losses and converts that information into a number that ranges from 0 - 100. The RSI takes a single parameter, the number of time periods to use in the calculation. Most traders, including the RSI calculations founder, J. Welles Wilder, recommend using 14 periods as a standard parameter for optimal calculations.
Wilder suggested using 70 and 30 as the overbought and oversold levels respectively. In general, if the RSI rises above 30 on the scale, it is considered a bullish signal for the stock in question. On the other hand, if the RSI falls below 70 on the scale, it is considered a bearish signal. Some traders spot the long-term trend and then use extreme readings as possible entry points. If the long-term trend is bullish, then oversold readings could signal potential entry levels.
Buy and sell signals can also be found by looking for positive and negative divergences between the RSI and the stock in question. As an example, investors could consider a falling stock whose RSI rises from a low point of (for example) 20 back up to say, 55. Because of how the RSI is constructed, the underlying stock will often reverse its direction shortly after such a divergence. As in the above example, divergences that happen after an overbought or oversold reading frequently provide more reliable signals.
The centerline for the RSI is 50 on the scale. Readings above and below can give the indicator a bullish or bearish angle. Overall, a reading above 50 indicates that average gains are higher than average losses and a reading under 50 indicates that losses are higher than gains. Traders in general look for a move above 50 to confirm a bullish signal or a move below 50 to confirm a bearish signal.
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