Smoothed RSI Timing for the Civilian Unemployment Rate

Summary

This model applies momentum timing to the civilian unemployment rate series. It calculates a short-period RSI on the input series, smooths that oscillator with an exponential moving average, and compares the result with a configurable midpoint threshold. Crossing above the threshold marks rising unemployment momentum, while crossing below marks falling momentum. The strategy code allows entries in either direction, although the accompanying explanation presents the output as a way to interpret economic conditions rather than trade unemployment directly.

The author motivates momentum timing by describing unemployment as tending to rise sharply and decline more gradually, and notes that other basic momentum methods could also be applied. The document offers no tested results, economic evaluation, or mapping from these signals to a tradable asset. The series is a macroeconomic indicator, so its release frequency and revisions may matter when using it for analysis; the simple crossover rules alone do not establish investment performance.

Key ideas

• The model computes RSI on the unemployment-rate series and smooths it with an exponential moving average.
• Crosses of a configurable threshold label momentum as rising or falling and generate strategy entries.
• The stated purpose is to understand economic conditions because the unemployment rate itself is not directly tradable.
• The author describes unemployment as rising sharply and declining more gradually as motivation for momentum timing.
• No empirical results or trading rules for a separate tradable asset are provided.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.