Relative strength index
The Relative Strength Index (RSI) is a financial
technical analysis oscillator showing price strength by comparing upward and downward close-to-close movements.The RSI is popular because it is relatively easy to interpret. It was developed by J. Welles Wilder and published in
Commodities magazine (now called
Futures magazine) in June
1978, and in his New Concepts in Technical Trading Systems the same year.Note that the term relative strength also refers to the strength of a security in relation to the overall market or to its sector. For instance XYZ might rise 2% when the rest of the market rises 1%. This is sometimes called relative strength comparative to avoid confusion. It's unrelated to the Relative Strength Index described here.
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Relative strength
A
stock's price movement over the past year as compared to a
market index (like the
S&P 500). 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 1-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 is a potentially misleading indicator of performance because it does not take
risk into account.
Relative Strength
Price performance of a stock divided by the price performance of an appropriate index over the same time period. A measure of price trend that indicates how a stock is performing relative to other stocks.