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The Relative Strength tool is very useful when comparing stocks head to head and when comparing a stock to the Market (the S&P 500 stocks equally weighted).
When comparing two stocks head to head you will find out which stock is performing better both in the short term (generally <6 months) and in the long term. It is like tug of war and the Relative Strength Tool will show you the winner.
This is the same when comparing a stock head to head with the Market. The tug of war winner is sorted out through the Relative Strength Tool and you will clearly see who the short and long term winners are. Simple as that!How does the Relative Strength Tool work? The Relative Strength Tool uses point and figure charting and the daily closing prices of each stock (in head to head) or the closing prices of the Market and a stock. The ratio of the closing prices is then plotted on a daily basis using point and figure charting rules. This way when one stock or the Market increases more than the other the ratio will change and show up on the point and figure chart. Relative Strength a very simple but effective tool on YP Investors that you can use to stay ahead in your investments!
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