Comparative Relative Strength

This chapter will share insights on a valuable lesser known form of market analysis referred to as comparative relative strength (CRS). This is the study of one stock or sector in relationship to other sectors or the overall market. This technical study can give a better look at where the money may or may not be flowing. Comparative relative strength is not to be confused with Welles Wilder's relative strength index or Williams Percent “R” indicators. Both of these technical tools are considered oscillators and give an indication if the stock or security is overbought or oversold relative to its past price action over a specific period in time.


In using CRS, we take one market and divide by another, and the result is a continuous close line graph. Typically, the numerator is the product that we are comparing against the denominator, or benchmark. This technique is used to uncover or detect any hidden weakness or strength when analyzing one company against another in the same sector or comparing an individual stock against its related industry sector. We can also use this technique to compare individual stocks or sectors to the benchmark stock index like the Standard & Poor's (S&P) 500, the Dow Jones Industrial Average, the Russell 200, the Nasdaq 100, or the Nasdaq Composite.

Why do traders use this analysis method?

  • To see where the money is flowing to help confirm a trade bias.
  • To see if a stock or sector is outperforming ...

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