RSI(2) Oversold Play: NTES
The first RSI(2)<2 play, ECA, is still up 5% from the close of the evening the post was published.
The next selection is NTES. This stock is oversold, and the price is near an area with 3 levels of support. There is the rising 50 day average, the rising uptrend line (started from the August low) and likely long-term support from the April and July highs/pivot ponts.
The stochastics reading is an area of concern. It is suggesting more weakness for NTES before a bounce. The stochastics may need to become more neutral or oversold before a bounce, although the extremely volatile market environment makes this directional call difficult.
I’ve placed a circle on the chart where I would like to buy NTES, should I decide to take this signal on Monday.
You can read more about the RSI(2) indicator and how I employ it in this article: Improve Your Timing With RSI(2).
I’m just testing out this new comment-editing feature I’ve been reading about.
December 15th, 2007 at 3:00 pmYou in all cash woody? except MVIS.
NTES looks like a good setup. I will put it on the watchlist for Monday.
December 15th, 2007 at 4:26 pmjust wondering your take on Apple, if you have a bit of time?
December 15th, 2007 at 4:49 pmWood,
You also have a “divergence” within the MACD.
jog
December 15th, 2007 at 6:41 pmNewE- I have positions in RIMM, AAPL, GES, and MVIS.
Bylo, will do.
Grant- I see no divergence between MACD and price. In fact, there is no divergence between price and either of the 3 indicators.
The divergence I see is between indicators, i.e., RSI(2) is showing oversold while Stochs and MACD are not.
As this strategy seeks to find stocks for a bounce, and nothing more, those divergences do not eliminate NTES as a candidate, but they should make the buyer be patient.
December 16th, 2007 at 10:00 amShed = wtf, you have “positions?” I know for sure you are short GES, and long MaVIS (like me)– what about AAPL and RIMM?
As you know, I’m short RIMM, but I’m not touching AAPL until a breakdown… I personally think it’s gonna be the last, what with this Christmas buying polishing the, er… apple and all.
December 16th, 2007 at 11:41 amWood,
Interesting, as I definitely can see a divergence in the MACD.
If nothing else it demonstrates just how subjective T/A can be.
jog
December 16th, 2007 at 2:57 pmGrant, what are you seeing with the MACD?
I’ve been considering more and more about how to take some of the subjectivity with TA. Because every indicator has an objective value at any given point in time, it should be possible.
December 16th, 2007 at 6:31 pm[...] previous RSI(2) pics have a 50% success rate. NTES is down ~5% from when it was profiled. However, ECA is consolidating beautifully along the 50 day average and looks poised to move [...]
December 20th, 2007 at 11:25 pm