Charts can mislead you

Article Excerpt

Here’s an Excerpt from a recent issue of Advice for Inner Circle Pro Members: “One form of technical analysis is the Relative Strength Indicator (RSI). It charts a stock’s current and historical strength, or weakness, based on its closing prices over a recent trading period. Specifically, it looks at whether a stock’s price on each of those trading days in the period closed up or down from the previous day. The RSI then compares the overall magnitude of a stock’s recent gains to the magnitude of its recent losses; it turns that data into a number that ranges from 0 to 100. RSI enthusiasts look for a move above 50 to confirm bullish signals, or a move below 50 to confirm bearish signals. One thing I’ve observed over the years is that charts and technical analysis always seem to give you a misleading answer, just when they can do the most damage to those who rely on them. That’s why I think it’s…