Relative Strength: The Basics

by | Jan 30, 2012 | Asset Management, Point and Figure

Relative Strength is possibly the single best approach to keep tabs on winners and losers in the stock market. How do you know if your investment is merely taking a breather or pulling back — or how do you know if this is the start of a freefall off a cliff? Relative Strength, along with point and figure charts, can often hold the keys.

Charts with Relative Strength BUY signals tend to:
Go UP FASTER than the rest of the market
— and tends to go DOWN SLOWER than the rest of the market.

Charts with Relative Strength SELL Signals tend to:
Go UP SLOWER than the rest of the market
— but tends to go DOWN FASTER than the rest of the market

We say “tends to” because it is not a RULE, but we often see tendencies in these patterns.

For more information about point and figure charts, feel free to call us!  A change in relative strength is a VERY big deal. But I would also add the following: Past performance may not be indicative of future results. Therefore, no current or prospective client should assume that the future performance of any specific investment or investment strategy will be profitable or equal to past performance levels.

All investment strategies have the potential for profit or loss. Changes in investment strategies, contributions, or withdrawals may materially alter the performance of your portfolio. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will either be suitable or profitable for an investor’s portfolio.

If you are relying on a blog post for specific investment advice, you are making a huge mistake. Please speak with an investment adviser before making ANY investment decisions.
If you do not have an investment adviser, we encourage you to contact Mullooly Asset Management at 732-223-9000, or through our website. Under no circumstances should the content discussed here to be considered specific investment advice.

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