Re: Trailing stops and taking profits (was: RE: [CANSLIM] AAII letter to the ...

From: Spencer48@aol.com
Subject: Re: Trailing stops and taking profits (was: RE: [CANSLIM] AAII letter to the ...
Date: Wed, 16 Jul 2003 13:37:55 EDT

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Hong:

     I just want to add two comments to Katherine's reply.  1) Comparitive RS 
gives a history of how the stock is doing compared to the market.  The 
strength of the stock as compared to the market can be seen in its graphic RS line.  
     2) WON puts a lot of value in the comparitive RS line (it is featured on 
his DGO graphs).  He has said in IBD before that the comparitive RS line can 
give you a clue to the strength of a leading stock.  For instance, you have 2 
leading stocks, one of which you are considering buying, and both are 
beginning to consoidate.  "A" stock's RS line is consolidating along with the stock; 
but "B"'s RS line is rising.  Choose to purchase the latter.

jans



In a message dated 7/16/2003 12:41:47 PM Eastern Daylight Time, 
kmalm@earthlink.net writes:

<< Your question:
 "Isn't the Comparative RS just mimic price/volume action?  So it doesn't
 give any new info."
 
 Answer:
 Absolutely not. First, the comparative RS does not consider volume, just
 price. The comparative RS calculation takes the stock's price on any one day
 and divides it by the value of the SPX (S&P500 index) on that same day. This
 is the reason why the RSLine (comparative RS) does not have a scale. This
 ratio is then viewed over time to see how this particular stock is doing
 against the market as a whole. For example, you can have a stock rising in
 price and still have a declining RSLine. Why? Because the stock is not
 rising as quickly as the market. Conversely, you can have  a stock falling
 in price and still have a rising RSLine. Why? Because the stock may be
 falling at a slower rate than the market is falling. This is a very powerful
 tool and I place far more importance on it than the RSRank itself, as it is
 not muddied by the weird behavior inherent in ranking systems. >>

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