Forum Archive Index - April 2003

[Phaedrus <Phaedrus@techemail.com>]

Phyllis,
        Here is an updated FBU chart for you. I have been following this stock 
using RSI (Relative Strength Index) buy signals as entry points. Historically 
these have been quite good, with the latest giving a Buy on 9/4/03 at $3.24. I 
have been using the default period value of 14 days for FBU.
 As with most any oscillator, stocks that are trending up give a string of 
misleading Sell signals, just as stocks trending down give a string of 
misleading Buy signals. When trending, stocks can remain Overbought or Oversold 
for lengthy periods of time. Notice the 6 month long string of premature Sell 
signals over the course of the uptrend of last year. To act on the first of 
these would have flicked you out of a profitable trade. The last of these 
signals is the best, but of course you have no way of knowing it is the last 
until later. That is why you look for Trend indicators to signal the end of a 
trend, rather than an oscillator.
     Regards,
              Phaedrus.

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