In a long-term uptrend (above 200-day SMA), buy when 2-period RSI drops below 10 (severe short-term oversold) and exit when price closes above the 5-day SMA. Designed specifically for broad market ETFs and index instruments.
Indicators Used
RSISMA 200SMA 5
Rules
📈 Long Entry
- Price above 200-day SMA (long-term uptrend established)
- RSI(2) closes below 10. Extreme short-term oversold
- Enter long on close of that day
- No fixed stop. Strategy is time/MA-cross based
- Exit: close when price closes above 5-day SMA
- Alternative exit: close after 5 trading days regardless
🎯 Scaling Variant
- Add second unit if RSI(2) closes below 5
- Add third unit if RSI(2) closes below 2
- All units exit together on SMA 5 cross
⚙️ Configuration
- // Connors RSI(2) Config
- RSI period: 2 (very short)
- Entry threshold: RSI(2) < 10
- Trend filter: price > 200 SMA (required)
- Exit trigger: close > 5 SMA
SPY/QQQ
Best Markets
3-5 days
Avg Hold
SMA 5 cross
Exit
💡 Pro Tip
This strategy is specifically validated on broad market ETFs (SPY, QQQ, IWM) where mean reversion is driven by index-level diversification. On individual stocks, especially small-caps with idiosyncratic risk, the edge disappears and the strategy underperforms substantially.