Chapter 12

Making Sense of Relative Strength Indicators

IN THIS CHAPTER

check Comparing stocks to the S&P 500

check Measuring stocks relative to their sectors and industries

check Introducing the SCTR tool

check Using performance and RRG charts

Technical analysis (TA) has changed over the years, and one of the changes is what relative strength means. The indicators in this chapter are completely different from the relative strength index (RSI) indicator in Chapter 11 because of these changes in terminology:

  • The RSI indicator in Chapter 11 compares current period closing prices to previous prices within a stock over the last 14 periods as a default.
  • New indicators today known as relative strength indicators analyze how strong a stock is compared to other stocks.

While the chapters about overlays and indicators (Chapters 10 and 11) help you with analyzing a chart, the relative strength tools in this chapter help you compare one stock to other stocks. To outperform the market, you need to know how to compare stocks to select the one performing the best within a particular sector or industry. Relative strength ...

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