Buying any upward Nasdaq cross of 50 RSI and shorting any downward cross has been highly effective since January 2019. It returned 89.42%, vs. 75.35% to buy and hold for the same period. The four errors over the period each delivered a loss of less than 1.5%. Perhaps significant, then, that we've now crossed below 50. (However, past performance is no guarantee of future results, and the errors were all in the September-October weak season.)
Comment:
The stock market boomed while the national narrative was about temporarily laid off workers rapidly returning to work. With most stocks 20-40% overvalued, the market is now turning downward as the focus shifts to rising permanent job losers, which are now a larger share of the unemployed than temporary ones. It will be a longer, slower recovery from here. Plus there's political risk: Biden wants to raise corporate taxes, and lots of state and local governments will have to raise taxes as well because they were excluded from federal stimulus. Even if Trump wins, he too has said he will make the national debt a priority in his second term. There are headwinds ahead, my friends. However, we could see one last big rally before the end of the year if Congress manages to cut another stimulus deal.