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#1
9th June 2007, 12:56 AM
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Relative Strength
Relative strength is a measure of price trend of one stock or index compared to another stock or index. Relative strength is arrived at by dividing one stock by another stock or by one stock by another index, or by one index by another! eg, say x/y is 1.0 for the past many months, and it becomes 0.75 just a week back. What does it mean? Either x has gone down , or y has increased, or some kinda combination of both. See this link: http://www.investopedia.com/ask/answ...vestrength.asp
How does this help? A LT investor can stick to stocks which have a higher ratio, and so does a trader if the same applies in a shorter time span, e.g, I would go long on IT stocks in the near time frame. A trader who is bearish, will look for a smaller ratio, to initiate his shorts. Here we take a look at the CNX IT Index / Nifty. As you can see, the RS is above the 20 period average (Yellow), hinting at a rise in IT stocks in the coming days. More stock specific examples later. PS: Don't confuse this and RSI- Relative Strength Indicator which is a different ball game altogether. ss  Last edited by sunil saranjame : 9th June 2007 at 01:06 AM. 
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#4
9th June 2007, 09:50 AM
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Re: Relative Strength
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Sir, I am really confused. 
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#6
9th June 2007, 10:51 AM
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Re: Relative Strength
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interestin. i read a book by larry williams, THE SECRET OF SELECTING STOCKS FOR IMMEDIATE AND SUBSTANTIAL GAINS. this book has a very nice concept about accumulation and distribution on the basis of relative strength. Iv tried it myself with bank stocks and Nifty. will include the study soon. till then have fun. http://www.************/file/11190568...Gains.html?s=1
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#7
9th June 2007, 10:59 AM
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Re: Relative Strength
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#8
9th June 2007, 11:08 AM
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Re: Relative Strength
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#10
9th June 2007, 05:00 PM
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Re: Relative Strength
Hi Sunil,
Great Work! Regards, Luckytrader
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