The weakness of relative strength

Article Abstract:

Charts can be used to examine trends in stock markets and identify turning points. The relative strength index (RSI) was developed in the 1970s and aims to forecast trends for both single company shares and for the market as a whole. RSI peaks often correlate with subsequent drops in UK share prices, while RSI bottoms often correlate with rises in share prices. This method can often identify short-term rallies, but the RSI may not always be a useful indicator during a bear market.

Methods, Stock-exchange, Stock exchanges, Graphic methods, Investment analysis, Securities analysis

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The warning bells of history are ringing

Article Abstract:

Stock price shifts can provide indicators about future prices despite efficient market theory which sees price shifts as providing no insights. Rallies in United Kingdom stock prices between Dec and Feb have tended to be followed by bear markets. Stock prices tend to perform poorly in May during bear market years. New economic news can also affect stock prices and forecasts, as occurred in Sep 1997 when prices rose after news that the UK as to join European monetary union.

Stock price forecasting

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