Positive Relative Strength stocks snap back fastest during distribution, and perform best in bull markets. Remember, we calculate RS on Point and Figure Charts.
Relative strength is best defined as “ how a stock is doing compared to another stock, and most importantly, in the same sector.
Traders must also be careful to see how the charting company preparing a point and figure chart with relative strength “classifies for sector” so that true “like companies are positioned together and can be compared equitably”.
For years Floyd analyzed and did manual point and figure charts and than did overlays of the stocks in a sector to “create” Relative Strength. And remember, I was taught to trade or study always 50 stocks or less, and seldom changing. Knowing the relative strength of any stock we pick in a sector in comparison with other stocks in that sector helps define where the stock is in the seasonality of the sector at the same time.
Constantly Monitor Relative Strength Charts
Watching RS point and figure charts for change can alert you to when a good stock moving up is losing support.
Relative Strength Charts show what’s going on, and allow you to let your profits run.
Relative strength charts are market indicators and can help you know whether you are playing offense or defense.
