Relative Strength Analysis
Relative Strength is a technical analysis strategy to help investors sort through all of the various recommendations.
Identify individual stock trends! - when the upward trends of stocks are identified early enough, the stocks may be purchased and a profit may be realized by a continuance of the trend. Although past performance is not necessarily a determining factor in the future performance of a stock, using Relative Strength Analysis for stock selection has proven to be a profitable strategy over time.
This selection, which is used to compare all of the stocks that are being followed (both Daily and Weekly History), will sort them by their strength rating of the previous week placing a rank on them and then sorting them by the current week's strength rating. The reason this report requires at least 45 Weeks of historical data is that we are looking for a sustained growth in price so that we can catch part of the growth of the issue in our own portfolio.
This report is one of the most valuable tools of this system. The report will show you which stocks are stronger and how much they are stronger than the previous. It provides you with a means of analyzing hundreds of issues without having to look at each of the individual charts to make comparisons. This tool has provided superior returns in testing and in actual practice. The idea is to buy stocks that are experiencing strong upward momentum with the expectations that the stocks will continue to be strong. These can be found within the top 10 or 20 issues. Look at the charts of the stocks from this group that meet your investment criteria.
Use this report in conjunction with the buy signals generated by the Daily and Weekly stock market barometers and you will have a winning combination that will help you make your money work harder.
One special note here is that the price of some stocks will spike upward due to some event such as an announced buyout offer. This spike will cause this stock to appear high in the relative strength listing. This is why we recommend that you look at the charts, so that you don't buy into an issue that has experienced a one time spike in price. It is important to look for issues that are experiencing a steady upward momentum.
You will also be able to see how a stock is performing relative to the major market indicators, such as the Dow Jones Industrial Average (DJIA) and the S&P 500.
It is also important to get a good cross section of stocks to follow.
The relative strength ranking allows either a Simple or an Exponential calculation. The Exponential Calculation is more sensitive, so that stocks that are exhibiting strength will show up higher on the list sooner, also when stocks are becoming weaker they will move lower in the list faster. The exponential calculation should help you identify stocks earlier in their strength, so that you can be more profitable.
Relative Strength Comparison Report