Relative Strength Breakouts

Relative Strength (RS) is a momentum indicator that compares a stock's price performance to a benchmark index, highlighting stocks outperforming or underperforming the market. This screener identifies stocks with recent RS zero-crossings, indicating potential trend reversals or breakouts:

• RS Calculation: \( RS = \frac{\frac{P_\mathit{ticker}(t)}{P_\mathit{ticker}(t-\mathit{period})}}{\frac{P_\mathit{benchmark}(t)}{P_\mathit{benchmark}(t-\mathit{period})}} - 1 \)
  Where:
  • \(P_\mathit{ticker}(t)\): Latest price of the ticker
  • \(P_\mathit{ticker}(t-\mathit{period})\): Price of the ticker \( \mathit{period} \) days ago
  • \(P_\mathit{benchmark}(t)\): Latest price of the benchmark index
  • \(P_\mathit{benchmark}(t-\mathit{period})\): Price of the benchmark \( \mathit{period} \) days ago
• Zero-Crossing: Identifies when the smoothed RS crosses the zero line, suggesting a shift in relative performance (positive for outperformance, negative for underperformance).
• Criteria: Stocks are selected if they have a recent zero-crossing (within 10 days), sufficient data (at least 90 days), and are trading above their 20-day SMA.
• Importance: RS breakouts can signal early opportunities for trend-following strategies, helping traders focus on stocks gaining strength against the market.