Connors RSI(2)

Checked October 2026

Connors RSI(2) buys a sharp two-day dip in an uptrend and sells when the price bounces. Larry Connors and Cesar Alvarez published RSI(2) in 2008, and it is not an RSI divergence. Backtoast ran it on SPY. It made 4.3% a year over 47 trades and failed.

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Connors RSI(2)

RSI(2) weighs the last two days' gains against their losses on a scale of 0 to 100, so below 10 means two days of mostly selling. The rule buys SPY when it's above its 200-day average and RSI(2) is below 10, and sells on the first close above the 5-day average. There's no stop, because Connors found stops hurt on stocks and indexes.

The Bollinger bands strategy also buys a dip, when price tags the lower band.

Where it comes from

It's from Connors and Alvarez's Short Term Trading Strategies That Work (2008). The book wasn't in hand, and sources differ on whether the buy line is 5 or 10. Empiricalab's independent SPY test from 1993 to September 2026, long only, found 265 trades with 77% winners and 5.0% a year, against 10.8% for holding SPY. The run is from late 2021 to October 2026.

The run is Backtoast's, from 29 October 2026, after costs.