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Relative Strength
StockCiphering.com calculates Relative Strength (compared to the S&P500) for
each of its stocks. This is a simple calculation that simply divides a stock's
closing price by the closing price of the S&P500 index each day and plots that
collection of numbers as a line on a chart. You may see this plotted as a line
on charts of stocks at various websites.
It is considered a bullish sign when the RS Line is rising as the stock is moving
sideways or when the RS Line hits a new 52-week high before the price of the stock
itself reaches a new high. It's an indication that the stock is outperforming
the market.
StockCiphering.com presents a stock screen called Early Risers
that reports on stocks whose RS Lines hit new 52-week highs before their prices have
hit new highs. This can act as a good heads-up signal on stocks in the
Cups With Handle screen and
Ceiling Bumpers screen.
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