Four Times in 30 Years. Monday Makes Five?

In Thursday’s post I laid out exactly what I was watching for: RSI(14) below 30, ATRP expanding, the 183 MA still rising. A high-confidence quick strike setup that has gone profitable every single time it has triggered in SPY’s history.

Friday closed. The setup triggered.

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We enter at Monday’s open.

Now here’s the interesting wrinkle, and it’s worth understanding before you pull that trigger. Depending on which chart you looked at Friday, the RSI either closed below 30 at 29.86 or held just above it at 30.42. Same ticker. Same 14-period lookback. Two different answers.

The culprit: dividend adjustment.

Platforms that back-adjust historical prices for dividends subtly rewrite past price action. Every quarterly SPY dividend gets distributed backwards through history, slightly altering the magnitude of prior up and down moves. That changes the average gain/average loss inputs that feed the RSI formula. Usually the difference is meaningless. Sitting right on our threshold of 30, it isn’t.

My backtest was built on unadjusted data -- the raw price series, the one that showed 29.86. So by the rules as tested, Friday confirmed the signal. If your charting platform runs on back-adjusted data you saw 30.42 and may have thought, close, but no trigger.

This highlights something every rules-based trader needs to nail down before going live: data consistency. Whatever series you tested on, you monitor on. A signal living right on a threshold is exquisitely sensitive to that choice. In this case it’s horseshoes and hand grenades, close enough is close enough, and the system says we’re in.

The rest of the checklist is confirmed. RSI has spent over 15 trading days below the 50 level. The 183 MA is rising. ATRP is above 1.5.

Monday open. Quick strike. Profit target 1.25%. Maximum hold two days.

Rules are rules. Let’s see what the market does.

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