Relative strength

Movement of a stock price over the past year as compared to a market index (like the S&P 500). A value below 1.0 means the stock shows relative weakness in price movement (underperformed the market); a value above 1.0 means the stock shows relative strength over the one-year period. Equation for Relative Strength: [current stock price/year-ago stock price] divided by [current S&P 500/year-ago S&P 500]. Note: this can be a misleading indicator of performance because it does not take risk into account.

Price Momentum

The performance of a stock relative to its industry or the performance of an industry relative to the market as a whole. A stock (or industry) that outperforms its industry (or market) for a given period of time is seen as a bullish sign for that stock (or industry). The concept is also called relative strength.

relative strength

The price strength of an individual stock compared with the strength of an industry index or a general market index. In general, a stock that acts stronger than its industry or the market as a whole shows a bullish sign for that stock. Likewise, an industry index that acts stronger than a market index is bullish for stock in that industry. Relative strength is typically used when calculating an index of a stock's price to its industry or market index over a period of time. Also called strength.

Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

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References in periodicals archive

In this paper, we study the implications of market cycles on relative strength strategies at both the medium-run and longer-run horizons.

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London registered an annual house price increase of 3.2% and continued to show its relative strength with an average of pounds 346,123.

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Besides, the relative strength index (RSI) diverges negatively from the trading price, which implies danger for a negative reaction.

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For each commodity market we examine here, we set out the structures of the markets and the major drivers of world demand and supply, and discuss the apparent relative strength of each of the drivers.

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