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Strategies & Market Trends : Point and Figure Charting
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To: Backfill who wrote (4445)7/5/1998 5:31:00 PM
From: R Stevens  Read Replies (2) of 34809
 
RS is a "quik" way of signing your post...

;) RS

It has also been occasionally known to stand for Relative Strength in the P&F lingo glossary. RS is an indicator that identifies how a stock's price changes as compared to the overall price changes of the market averages.

For example from April 22 to June 16, the Nasdaq index fell from 1920 to about 1720 or 200 points which is about -10.4%. Cisco Systems stock actually gained during this period, increasing in price from $74 to $79 per share, or about +6.7%. Since Cisco's price change was much better than the market's, we would say it has excellent Relative Strength compared to the Nasdaq stocks in general.

The real beauty of knowing Relative Strength can be seen as follows: We can extrapolate on this excellent showing by Cisco during a down market and expect it to do even better once the Nasdaq ends it's decline and starts going back up.

And in fact if we take the remaining period of June 16 to July 3, we find that the Nasdaq recovered from 1720 to 1890, or 9.9%. And as we might expect, Cisco gained also, increasing from $79 to $93, or big "juicy woocy" 24%! Again showing that relative to the market, it goes down less during a market decline and up more during a market up trend.

That is the general idea. The charting and calculating of Relative Strength are described in Chapter 5 of the DW P&F book, or by another P&Fer with faster fingers.

Good Luck...(the original) RS

"..." = my attempt at being warm and fuzzy...

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