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Strategies & Market Trends : 99 RS stocks--WATCH THEM FLY HIGHER AND HIGHER -- Ignore unavailable to you. Want to Upgrade?

To: Early Out who wrote (228)	10/29/1997 8:06:00 PM
From: wrich9	Read Replies (1) \| Respond to of 836

John, Frankly, this is getting more interesting than I ever thought it would get. And, the more i think about it, the better i understand it. The way i see it is that the Relative Strength of a stock is the relative price performance of the subject stock to either the general market, the other stocks in that group or sometimes a group like the S & P 500. Really relative compares the stock's price and has nothjing to do with EPS or accumulation. For example you could have an IPO that comes out of the box fast, does better than 90 percent of the stocks in the S & P 500 over a year and the stock would have a relative strength of 90. Assuming that the co has nothing but losses and no interest from funds (not likely however) then the EPS would likely be below 10 and the accumulation would be a D. Thats my understanding of it. Now to the two companies in your example. Yes it could happen. If one company started at 9, went to 95 and now is at 87. The other started at 9 and moved up on normal path to 87. Since they both started at 9 and are now at 87, they would have the same relative strength. Note that this assumes no weighting. I think the relative strength numbers in the IBD are weighted for performance in the last quarter. This being the case, the stock that was recently at 95 must have started at "say" 6 to make up for the weighting in the last quarter. Again, this is interesting. Also you raise questions that I had not even thought of. The more you write, the more i think about it and frankly i think the better i understand this phenomenon called RELATIVE STRENGTH. Thanks for your questions, and luck to all Will