RSI (Relative Strength Index)
(Revised July 09, 2011)
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In these tutorials I will discuss what to do when you visually look at a technical indicator or oscillator on a chart, I won't discuss math jargon or history, I think it's more important to `know how to react at a glance (what is the chart saying), therefore only consider this an introduction in brief based on my opinion.  You should educate yourself further if interested. The charts used are not invitation to buy or sell, and are used only for example purpose.
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Intro
The RSI oscillator will attempt to show you an overbought or an oversold condition based on the speed and change of price movements of that stock or market (the momentum ).
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So how does it work?
The RSI has a scale that ranges from 0-100 
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If the relative strength index is below 50 it generally means the stock's losses are greater than the gains.
You should "Buy" the stock when deemed "oversold" and under valued  by the RSI as it approaches and crosses up over 30 from below (as seen on the chart below).
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When the relative strength index is above 50, it generally means the gains are greater than the losses.
You should "Sell" the stock when deemed "overbought" and over valued by the RSI as it approaches and crosses 70 from above (as seen on the chart below).
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The default settings is normally a 14 day time frame, but settings of 9 or 25 should be experimented with because the sensitivity of the RSI depends on the number of days used.  The right time frame used also depend on the stocks volatility (in example: a large surge or drop in the price of a stock will affect the RSI by creating false buy or sell signals). 
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In the chart below the RSI was increased to a 25 day period to get a better reading.  The RSI readings will be more inconstant on this chart, if it is was used with fewer days.
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So what do I think?
I think the Relative Strength Index is a very useful tool for longer term holdings.  It will compliment other technical indicators when finding oversold and overbought markets.  However, in short term & volatile markets the RSI can produce false signals, and the setting do have to be adjusted for each ticker (a 14 day time frame will be a good starting point).
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As with all charts and technical indicators you need  to pick a time frame and stick to it.  Don't pick one and trade in another.
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IMO, not one technical indicator should be used by itself.  The more indicators that line up to confirm the signal the better chances your trade will succeed.
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Good luck on all your trades and or investments
And happy capitalism