Relative strength is a measure of how a stock is performing when compared to something else, in this case the S&P 500 Equal Weighted Index (SPXEWI).
Relative Strength Changes for the Week
Relative strength is a measure of how a stock is performing when compared to something else, in this case the S&P 500 Equal Weighted Index (SPXEWI). Each day the stock's closing price is divided by that of the SPXEWI, the resulting numbers decimal is moved two places and then plotted on a Point & Figure chart. Whenever the relative strength chart shows a double top buy signal (e.g. RS Buy or Positive Relative Strength), it suggests the stock is likely to outperform the market for the foreseeable future. Conversely, whenever the relative strength chart gives a double bottom sell signal (e.g. RS Sell or Negative Relative Strength) it suggests the stock will under-perform the market. Relative strength signals tend to last roughly 18 to 24 months on average. Consequently, changes from buy signals to sell signals (and vice versa) are important to be aware of as they are longer-term implications of a stock's likely performance versus the indices. Using the Point & Figure chart along with the relative strength chart will allow you to better ascertain risk-reward and other trade management tools, but we always want to over-weight our portfolios toward those stocks that are on RS buy signals, giving us the best chance of outperforming the broader market.
In the Optionable Universe, this week we saw 10 relative strength buy signals compared to 13 last week. On the sell side, there were 7 relative strength sell signals compared to 21 last week.
Stocks Moving to an RS Buy Signal
| Symbol | Company | Sector | Price | RS vs Market Signal | RS vs Market Column | RS vs Peer Signal | RS vs Peer Column | Trend |
|---|---|---|---|---|---|---|---|---|
| AFAM | Almost Family, Inc. | Healthcare Providers | 56.750 | Buy | X | Sell | X | 4  |
| LPSN | LivePerson, Inc. | Technology Services | 9.900 | Buy | X | Sell | X | 3 |
| MCHP | Microchip Technology Incorporated | Semiconductors | 81.630 | Buy | X | Sell | X | 3 |
| PCRX | Pacira Pharmaceuticals Inc | Pharmaceuticals | 50.450 | Buy | X | Buy | X | 5 |
| RAIL | FreightCar America, Inc. | Industrial Goods & Svcs | 17.510 | Buy | X | Buy | X | 5 |
| RGEN | Repligen Corp | Biotechnology | 39.720 | Buy | X | Buy | X | 5 |
| TTEC | TeleTech Holdings, Inc. | Industrial Goods & Svcs | 38.200 | Buy | X | Buy | X | 5 |
| XLNX | Xilinx, Inc. | Semiconductors | 65.460 | Buy | X | Sell | X | 3 |
| SORL | Sorl Auto Parts Inc. | Automobiles | 5.970 | Buy | X | Buy | X | 5 |
| BABA | Alibaba Group Holding Ltd (China) ADR | Retail | 124.020 | Buy | X | Sell | X | 3 |
Stocks Moving to a RS Sell Signal
| Symbol | Company | Sector | Price | RS vs Market Signal | RS vs Market Column | RS vs Peer Signal | RS vs Peer Column | Trend |
|---|---|---|---|---|---|---|---|---|
| BXP | Boston Properties | Equity REITs | 120.890 | Sell | O | Buy | O | 1  |
| DKS | Dick's Sporting Goods, Inc. | Retail | 41.040 | Sell | O | Sell | O | 0 |
| LAYN | Layne Christensen Co. | Industrial Goods & Svcs | 7.780 | Sell | O | Buy | O | 2 |
| NNN | National Retail Properties, Inc. | Equity REITs | 36.720 | Sell | O | Buy | O | 1 |
| WLB | Westmoreland Coal Company | Coal | 7.930 | Sell | O | Buy | O | 1 |
| SN | Sanchez Energy Corp. | Oil Companies Major | 6.650 | Sell | O | Buy | O | 2 |
| SYF | Synchrony Financial | Financial Services | 26.840 | Sell | O | N/A | O | 1 |
