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Registered User
Joined: 3/9/2006
Posts: 39
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I have read Doug's excellent video on plotting and interpreting Industry RS plots. In it he explains that the spatial position of the RS plot compared with the price line is irrelevant.
But, if I plot RS indicators against three comparision symbols in a seperate plot window, can I make any meaningful statements based on the relative position of the RS plots?
Assume that (in a hypothetical case) the three RS plots are three parallel lines whose slope changes are roughly identical, but RS:A is "higher" on the Y-axis than RS:B which is higher than RS:C. Can I say that while the active symbol is underperforming (or overperforming) all three comparision symbols, it is doing so to a lesser degree with RS:A than RS:C?
thanks in advance
PS: My objective in this excercise is to quickly determine the relative performance of the active symbol, it's industry, sub-industry and the S&P 500.
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Worden Trainer
Joined: 10/1/2004
Posts: 18,819
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If you plot three different RS lines they will all be on different scales (thus their relative position is meaningless).
Here is an idea...
Over what time period do you want to "quickly determine the relative performance of the active symbol, it's industry, sub-industry and the S&P 500"?
Lets say the answer is 21 days.
Add a Linear Regression line (period 21) to each of your RS lines. If the LR lines are sloping up you know the stock out performed that comparison (over 21 days). If the LR lines are sloping down you know the stock under performed that comparison (over 21 days).
Here is an example:
Notice the up-sloped LR lines on the Industry and Sub-Industry RS lines? This stock out-performed them over the last 21 days.
Notice the down-sloped LR line on the QQQQ RS line? It under performed the QQQQs for the 21 days.
Does that help?
- Craig
Here to Help!
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Registered User
Joined: 3/9/2006
Posts: 39
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Excellent suggestion. Yes, that helps a lot!
Thank you very much Craig.
-Sundeep
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Worden Trainer
Joined: 10/1/2004
Posts: 18,819
|
My pleasure.
- Craig
Here to Help!
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