ETF Prophet

Building on this week’s post by Frank Hassler in which he defined a simple but elegant equity building strategy using weakness in the RSI2 to accumulate positions in SPY I ran additional RSI studies with the goal of identifying short term trading opportunities in SPY using a similar RSI support/resistance approach. And, whereas Frank used the RSI2 for his signal line, I’ve adopted the somewhat longer term RSI4.  Since this study is designed as a pure exercise in RSI signal ability no additional signal confirmations or stops are utilized. This study trades Long only.

The TS code language is about as simple as it gets:

We can increase net returns by allowing multiple entries but limiting the exits to the defined crossover.  Known as “pyramiding” this tactic adds 2 more trades and almost 50% increase in equity return. See results below for our rolling 16 month study period:

Next week we’ll look at how the RSI4 works with QQQ and after that you may wonder why you haven’t traded with this simple setup before.