Identifying Strong Stocks: Utilizing Relative Strength Indicators

When seeking out promising stocks and filtering out underperformers, turn your attention to IBD’s exclusive Relative Strength (RS) Rating. This critical metric serves as a valuable tool for pinpointing top stocks poised for significant upward movements.

The RS Rating, graded from 1 (weakest) to 99 (strongest), evaluates a stock’s price performance over the past 12 months. Typically, the most promising stocks boast an RS Rating of 80 or higher as they initiate a new upward trend.

Relative Strength Line versus RS Rating
Additionally, closely monitor the relative strength line, comparing a stock’s price performance to that of the S&P 500. A rising RS line indicates that the stock is surpassing the overall market’s performance. Witnessing the line in or around new high territory during a breakout is a positive indicator, signaling bullish prospects for the stock.