RSI (Relative Strength Index)
RSI(14) measures the speed and magnitude of recent price changes on a 0–100 scale. In JumpStartSignal it works as a hard gate: any stock with RSI above 70 is excluded at Stage 2 before scoring begins, keeping every scored candidate at a technically approachable — not extended — entry point.
0 entry pts — fires before scoring
(7yr hold, standalone)
2012–2025
tested out-of-sample
Signal Illustration
The chart below uses synthetic price data (seed-fixed, deterministic) to illustrate exactly when and how the RSI (Relative Strength Index) fires. The arrow marks the event date; the shaded region shows the post-signal window our screener evaluates.
| Period | Phase | Signal |
|---|---|---|
| Pre-event | 50-day SMA below 200-day SMA | — |
| 2023-10-02 | 50-day SMA crosses above 200-day SMA | RSI (Relative Strength Index) fires |
| Post-event | Uptrend phase — screener evaluates entry | Entry window |
Entry Scoring Pathway
Entry signals are a precision layer on top of quality. JumpStartSignal's quality score (0–60) does the heavy lifting — confirming strong ROE, clean balance sheets, and established trend structure. The entry score (0–20) answers the follow-on question: of the stocks that already pass those quality filters, which ones are at an actionable inflection point right now?
RSI (Relative Strength Index) is not part of that scoring layer — it operates upstream as a hard exclusion gate at Stage 2. Any stock with RSI ≥ 70 is removed before the 100-point score runs, ensuring every candidate that reaches entry scoring is already at a technically approachable — not extended — level. Below is the current entry scoring landscape that applies to every stock that clears the RSI gate:
| Signal combination | Entry pts | Tier reached |
|---|---|---|
| VWAP+MACD Confluence | +1 | MONITOR — → 9 pts below OPPORTUNITY gate |
| Golden Cross | +9 | MONITOR — → 1 pt below OPPORTUNITY gate |
| VWAP+MACD Confluence + Breakout Volume | +4 | MONITOR — → 6 pts below OPPORTUNITY gate |
| Golden Cross + VWAP+MACD Confluence | +10 | ✓✓ SPOTLIGHT → SPOTLIGHT gate (≥10) |
| Golden Cross + VWAP+MACD Confluence + Breakout Volume | +13 | ✓✓ SPOTLIGHT → SPOTLIGHT gate (≥10) |
Filter Effectiveness: Walk-Forward View
The figure below shows how stocks that passed the RSI ≥ 70 exclusion gate performed across 25 independent time windows (2012–2025). This reflects the quality of the candidate pool the filter admits — not RSI as a forward-looking timing predictor. Because the RSI gate is already built into every OPPORTUNITY and SPOTLIGHT signal the pipeline produces, its effectiveness shows up in the system's overall alpha, not in a standalone RSI-timing metric.
(3yr hold · 1/24 windows)
How JumpStartSignal Uses This Signal
RSI functions as an entry filter in JumpStartSignal's pipeline — stocks with RSI ≥ 70 are excluded before the 100-point scoring runs, so every candidate that reaches scoring is already at a non-extended entry point. An RSI overbought-reversal entry signal was historically tested but eliminated in Round 16 after showing 90% feature overlap with VWAP-MACD confluence.
How Scoring Works
The RSI ≥ 70 exclusion is a binary pre-score gate, not a point-based signal. An RSI overbought-reversal scoring signal was historically included in the entry score but removed in Round 16: mRMR analysis found it was 90% redundant with vwap_macd_confluence (both selected nearly identical stocks), and Elastic Net returned a negative coefficient — adding it was picking up noise, not signal.
- Why entry scoring matters: Entry signals confirm a stock is at an actionable inflection point, not just a long-term quality holding.
- RSI (Relative Strength Index) advantage: The RSI ≥ 70 filter prevents chasing extended moves. Every stock that clears Stage 2 is already at a healthy RSI reading, so the entry scoring signals (golden cross, VWAP-MACD confluence) fire at realistic rather than stretched price levels.
Data Source & Methodology
Backtested across 3461 screening dates from 2012–2025. Returns measured from entry date to exit date at each hold period. Portfolio vs S&P 500: +372.4% vs +209.2% (alpha: +163.2%). Signals fired by JumpStartSignal's technical screening engine; fundamentals sourced from SEC EDGAR XBRL filings. Constituent universe from NASDAQ.
Frequently Asked Questions
What is RSI and how does JumpStartSignal compute it?
RSI (Relative Strength Index) was developed by J. Welles Wilder in 1978. It compares smoothed average gains to average losses over 14 trading days using Wilder's exponential smoothing, producing a 0–100 scale. Readings above 70 signal overbought conditions; below 30, oversold. JumpStartSignal computes RSI(14) from the same 756-day price history used for all SMA and EMA calculations.
Why exclude stocks with RSI above 70?
Stocks with RSI above 70 have typically already run hard — near-term reversal risk is elevated and the entry price is extended. JumpStartSignal targets 3–7 year holds starting from quality entry points, not momentum chases. Filtering RSI ≥ 70 at Stage 2 means every candidate that reaches scoring is already at a technically approachable level.
Why was the RSI overbought-reversal entry signal eliminated?
The signal (RSI drops back below 70 after exceeding it) showed 4% walk-forward consistency at 7yr with +-1.5% avg return delta — interesting numbers. But mRMR analysis found it was 90% redundant with the VWAP-MACD confluence signal: nearly identical stocks were selected by both. Elastic Net regularization then returned a negative coefficient, meaning the stocks uniquely selected by the RSI signal dragged on returns. With both tests failing, Round 16 eliminated it.
Does RSI predict long-term stock returns on its own?
No — the walk-forward data shows 0% consistency at 1yr and mixed results at 3yr. RSI measures momentum, not business quality. JumpStartSignal's 14-year outperformance is driven by quality signals (ROE, low debt, revenue growth) combined with discrete entry signals. RSI contributes by keeping candidates at approachable levels, not by directly predicting returns.
See which stocks have the RSI (Relative Strength Index) today
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Get Free Daily Reports →Not financial advice. Past backtest performance does not guarantee future results. Data as of 2026-03-31 · Backtested 2012–2025 · How It Works