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I’m a huge fan of Investors.com MarketSmith charting application. Their implementation of a Relative Strength Line (RS Line) is my go-to indicator.

In MarketSmith, the RS Line represents a stock’s performance versus the S&P 500. If you are looking at a weekly chart, the RS Line is the performance of the stock over the past week versus the S&P 500 over that same time frame. The same logic applies to the daily and monthly charts, only the time frames are different.

If a stock moves up for the day/week/month and the S&P 500 does not, the RS Line will move up. If a stock ends the day/week/month flat, yet the S&P 500 moves up, the RS Line will go down.

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3 weeks tight is a bullish continuation pattern first documented by IBD’s founder, William O’Neil.

The pattern can used as an opportunity to add to an existing position as it often occurs after a breakout above a cup with handle or other technical pattern.

Head over to TradingView to install the Three Weeks Tight indicator

The 3 weeks tight pattern forms when a stock closes within approximately 1% to 1.5% of the prior week’s close for at least two weeks. The reason for the bullishness is that it indicates that investors who moved the stock upward in price since the breakout are not taking profits, the price is holding steady.

The buy point is just above the area of resistance formed at the highs of the three weeks plus 10 cents. The ten cent addition to the price is to ensure a push through the resistance at the high of the range.

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