RSI indicator
A gauge that labels a stock oversold or overbought from its recent ups and downs.
The relative strength index compares the size of a stock's recent up days with its recent down days and turns the ratio into a number between zero and one hundred. Below thirty it is called oversold, above seventy overbought. It is drawn under almost every chart in every trading app, which is why it turns up in so many pitches: "buy when the RSI is oversold after the gap".
The indicator is arithmetic on past prices; it contains no information the prices did not already contain. Whether an oversold reading predicts a bounce is an empirical question with a different answer in each market and horizon, and the logbook's rule is that an indicator earns a place in a strategy only by passing the same pre-registered test as anything else. So far, in the entries where it appeared, it was part of the pitch and not part of an edge.
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Where this word comes up
First needed in the log entry H-042 · The post-earnings bounce did not survive our cost assumptions.
From the same entry: Backtest, Basis point, Buy the dip, Correction for looking twice, Gross edge, Index membership, Large caps, Net return, Post-earnings drift, Pre-registration, Published anomaly, Quarterly results, Real costs, Short side, Survivors only, Terciles.