RSI (Relative Strength Index)

Relative strength index measures the strength or weakness of a stock based on the closing prices of recent trading periods. In Katelynn's report, daily (or weekly) RSI is calculated based on the closing prices of each trading period (a day or a week) using simple moving average (SMA) strategy (i.e. Cutler's RSI). The equation for calculating RSI is
RS = SMA(U,n)/SMA(D,n)
RSI = 100 - 100/(1+RS)
RSI is a value between 0 and 100. Generally, a stock with RSI above 70 is considered overbought, while RSI below 30 is considered oversold. Experiences suggest RSI tends to fluctuate between 40 and 90 in a bull market with the 40-50 zones acting as support. On the other hand, RSI tends to fluctuate between 10 and 60 in a bear market with the 50-60 zone acting as resistance.

daily/weekly RSI greater than 50 indicates daily/weekly upward momentum, and vice versa

The latest ratio tab in "Advanced Query" webpage provides two weekly RSI (i.e. RSI-W14 and RSI-W5). RSI-W14 traces back to 14 weeks ago and measures mid to long term strength of a stock. RSI-W14 is less sensitive to short-term price fluctuations. RSI-W5 traces back to 5 weeks ago and measures short term strength of a stock.

The quantile ranking score of RSI enables investors to evaluate the strength of a stock in corresponding industry, sector, or on the whole market. Basically, higher RSI corresponds to higher RSI quantile ranking score.

Example 1: Starbuck (SBUX) has a RSI-W14 of 51.18, and RSI-W5 of 57.97 as of 2018-04-27, indicating a slightly bullish momentum in the last 14 and 5 weeks.

In this example. RSI-W14 and RSI-W5 have very similar values, indicating a generally consistent trend of SBUX during the last 14 and 5 weeks. Take RSI-W5 for example, the RSI-W5 of SBUX is higher than 35% industry peers, which is equivalent to say SBUX is more bullish than 35% stocks in the same industry (Restaurants). In another word, 64% stocks in the "Restaurants" industry are more bullish than SBUX. We also noted that RSI-W5 of SBUX is higher than 48% of other stocks on the market, suggesting the "Restaurants" industry is generally more bullish than the market average during the last 5 weeks.

It is noteworthy that RSI-W14 and RSI-W5 sometimes can be very different. This usually happens when a turning point has been reached. In the case of an upward turning point, RSI-W14 is usually low and RSI-W5 is usually high. In the case of a downward turning point, RSI-W14 is usually high and RSI-W5 is usually low.

Note that purple color is used to indicate there is no preference for high (or low) quantile score, but generally a high quantile score is a bullish signal (also potentially overbought), and a low quantile score is a bearish signal (also potentially oversold).

Technically, RSI can be used with HCD, LCD to help investors to determine the timing of taking long/short position. Generally, a stock with high HCD quantile score (further away from 52-week high than peers), high LCD quantile score (closer to 52-week low than peers), and RSI greater than 50 indicates a potential rebound (after oversold) and a long position might be considered^*. On the other hand, a stock with low HCD quantile score (closer to 52-week high than peers), low LCD quantile score (further away from 52-week low than peers), and RSI less than 50 indicates a potential correction (after overbought) and a short position might be considered.^*

* Other financial metrics must be considered.