Back in 2016 I published an article on using short term RSI (relative strength index) on SPY. Let’s test how a slightly different strategy performs on QQQ:
- RSI(2) must be lower than 10.
- IBS must be lower than 0.2 (read here for an explanation of IBS).
- If both 1 and 2 are true, then enter at close.
- Exit at close when today’s close is higher than yesterday’s high.
The numbers look like this:
Buy and hold returns 7.87%, while the strategy returns 13.79%, a pretty big difference. Even better, the strategy has performed very well in four bear markets (2000-2002, 2008/09, 2018 and Covid-19 in March 2020).