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<SPAN
class=482313013-29072003>MR,
Below
is a description from TA A-Z for Relative strength comparative. Since the
values for the comp,Ndx and QQQ are different their comparison to the Dow will
also be different. The use of the indicator is simply to see how your given
stock/index compares to a particular stock/index. More important perhaps is the
DIRECTION your stock is taking in comparison to the base security. This enables
you to see if your security is leading or trailing the general direction of the
base........
<SPAN
class=482313013-29072003>
Regards,
Jayson
RELATIVE STRENGTH, COMPARATIVE
Overview
Comparative Relative Strength compares two securities to show
how the securities are performing relative to each other. Be careful not to
confuse Comparative Relative Strength with the Relative Strength Index.
Interpretation
Comparative Relative Strength compares a security's price
change with that of a "base" security. When the Comparative Relative Strength
indicator is moving up, it shows that the security is performing better than the
base security. When the indicator is moving sideways, it shows that both
securities are performing the same (i.e., rising and falling by the same
percentages). When the indicator is moving down, it shows that the security is
performing worse than the base security (i.e., not rising as fast or falling
faster).
Comparative Relative Strength is often used to compare a
security's performance with a market index. It is also useful in developing
spreads (i.e., buy the best performer and short the weaker issue).
Example
In the following charts, the top chart displays both Microsoft
and IBM's prices.
<IMG height=268
src="gif00441.gif" width=380>
The bottom chart shows the Comparative Relative Strength of
IBM compared to Microsoft.
The Comparative Relative Strength indicator shows that IBM's
price outperformed Microsoft's price during the last three months of 1993. It
also shows that IBM's price then underperformed Microsoft's price during the
first three months of 1994. (I drew the trendlines on the Comparative Relative
Strength indicator using the linear regression technique.)
Calculation
The Comparative Relative Strength indicator is calculated by
dividing one security's price by a second security's price (the "base"
security). The result of this division is the ratio, or relationship, between
the two securities.
<FONT face=Tahoma
size=2>-----Original Message-----From: mroman59
[mailto:mroman59@xxxxxxxxx]Sent: Tuesday, July 29, 2003 8:38
AMTo: amibroker@xxxxxxxxxxxxxxxSubject: [amibroker] Repost
regarding RelStrength indicatior - need help to understand
itI have looking to use comparitve relative strength
indicator that is given in AB, for example, RelStrength( "^DJI",fixup=1). As
of now I perform an exploration that returns and desired number of stocks
meeting my criteria. To see what values RS gives me, I include the
following index:AddColumn(RelStrength(
"^DJI",fixup=1),"RS/DJI",1.2);AddColumn(RelStrength(
"^SPX",fixup=1),"RS/SPX",1.2);AddColumn(RelStrength(
"comp",fixup=1),"RS/COMP",1.2);AddColumn(RelStrength(
"NDX",fixup=1),"RS/NDX",1.2);AddColumn(RelStrength(
"qqq",fixup=1),"RS/QQQ",1.2);I expected the values returned would be
similar for COMP, NDX, and QQQ as these % returns are similar. However, the
numbers are quite different. Not know exactly how RS formula is determined
and how to interpret such returned numbers becomes difficult to get any use
from this indicator. I am thinking that some how these values can be
reported so that the comparison of a given stock compare to a given index
can be standardized to make some sense of the relationship of the stock
compared to various indexes, but I don't know how to do this. If
anyone has been able to take the returned values for given indexes and
modify the results so that the comparison of a stock to any index can be
scaled across indexes, please advise me. I guess what I would like to do is
use this indictor to give a percentile ranking, such as seen in Investors
Business Daily, i.e. RS = 90 etc.Thank YouMRSend
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