For those who are not convinced of the value of relative performance, or RS analysis, I would point out that the RS analysis of the financial sector was negative early in the year, well before the fundamentals weakened.
On a regular basis, I look at the RS analysis of the mid- and small-cap sectors because being in the right-sized stocks can be quite important.
The relative performance broke through its longer-term downtrend, line h, which confirms the uptrend in the RS line (line i).
Specifically, I look for the monthly OBV and RS analysis to confirm a major new high, and then develop a strategy to buy on the correction.
For comparison purposes I have provided the relative performance or RS Analysis chart of FBIOX that you are more familiar with from my daily column.
By February 11, the RS had surpassed major resistance at line i and the OBV had also broken through the resistance at line j.
Several days after the low (September 20) I became much more defensive as the weekly relative performance or RS analysis had formed a negative divergence and the daily OBV was below its WMA (point 7).
The four stocks I have selected from the list have the most positive relative performance, or RS analysis patterns.
At the start of the current bull market, the RS analysis revealed an upside breakout in the technology sector, as I wrote here on March 4, 2009, which suggested that tech stocks would lead coming out of the bear market.
The RS line has dropped back to test longer-term support at line i.
And I have a feeling that this might be the way that this rumour about higher Rs values might have come from.
The RS line has bounced from its WMA, with more important support at line i.
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