rsi divergence

Using the Relative Strength Index (RSI) and Covered Calls to Preserve Long Term Capital Gains

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One of the tools I regularly use to preserve gains and especially long-term capital gains is writing covered calls on positions that I think can do down in the near term. Technical analysis is a great tool to predict short-term price movements.  Take the example of Crown Castle Internationa. Crown Castle is a real estate investment trust and provider of shared communications infrastructure in the United States. Its network includes over 40,000 cell towers and nearly 80,000 route miles of fiber supporting small cells and fiber solutions. Wikipedia CCI has got most of the ingredients we want for a low-risk equity … Read more

Using the Relative Strength Index (RSI)

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The Relative Strength Index (RSI) was first developed by renowned technical analyst J. Welles Wilder. It is not to be confused with relative strength, which compares a stock’s price performance to that of an overall market average, such as the S&P 500. Instead, the RSI analyzes the recent performance of a security in relation to its own price history. RSI is a valuable tool to determine overbought/oversold levels. There are five major principles of RSI analysis: 1)  When RSI goes above 70 or below 30, it indicates that a stock is overbought or oversold and vulnerable to a trend reversal. … Read more

Divergence- the best technical indicator

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Divergence A divergence is a move in the price of an asset not confirmed by a comparable move in the applied technical indicator. For example, a bullish divergence exists when a market reaches a new low without the indicator reaching a corresponding new low. Conversely, a bearish divergence exists when a market reaches a new high without the indicator reaching a corresponding new high. In my opinion, divergence is the most predictive of all the indicators. It will be early more often than not. Early can be very painful. A popular stock market tidbit of wisdom reads like this: “What’s … Read more

Technical Analysis that Works

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  “You see I can predict this stock went down!”   I’ve read a great deal on technical analysis and spent a great deal more time testing various indicators, programs, backtesting, and attending seminars on the subject.  At first I thought I would write a piece with a top down view and summarize the major indicators in use today.  I’ve hesitated and even anguished over doing that for a couple of reasons:  But first let’s set the discussion by quoting Wikipedia’s succinct definition: “Technical analysis is a financial term used to denote a security analysis discipline for forecasting the direction … Read more