MonthDecember 2020

RS Line vs RS Rating – What’s the Difference?

A common question regarding MarketSmith: what is the difference between the RS Line and RS Rating?

I originally wrote a short post describing the differences (see below). The video tutorial that follows provides some additional insight as well as highlights several examples on how to use both indicators when scanning for growth stocks.


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How to Trade Like an Investing Champion – Annotated Chart

Investor’s Business Daily recently hosted a webinar How to Trade Like an Investing Champion. The moderator, Irusha Peiris, was joined by U.S Investing Champions David Ryan (1985, 1986 and 1987) and Mark Minervini (1997). This is an excellent webinar to get insight into how these award winning traders analyze both the market and stock setups.

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Divergence and True Market Leaders

One sign of a potential true market leader is when there is a divergence of the stock’s price action versus the overall market. In this post I’ll show several examples where the S&P 500 was moving down while a stock was moving up, preceding a large gain over the coming months.

As with any technical or fundamental indicator, divergence is no guarantee of upward price movement. However, as you’ll see, divergence may be foretell a winning stock, one that can make a significant move higher.

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Closing Range vs True Range – What’s the Difference?

One way to help judge supply and demand for a stock is to pay attention to the closing range, which indicates where a stock closed within the price range for the day/week/month. Closing near the high indicates buyer demand for the stock. When near the bottom of the range, there was more selling than buying.

Closing Range Considerations:

• The closing range indicates where in the range (day/week/month) a stock closed.
• Higher in the closing range, buyers were in charge. More sellers than buyers when lower in the range.
• A closing range of 40%+ is supportive action.
• Even if a stock closes down for the day, if the closing range > 40%, that is still considered a sign of strength.

The true range takes into account the previous daily or weekly close. This provides another perspective as it relates to the current action, accumulation or distribution as well as the overall trend. The examples below will provide more specifics.

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