Also right up front, we are talking about high relative strength stocks and not the stock’s Relative Strength Index (RSI). The RSI is a momentum indicator and relative strength is a comparative study between certain points of time with different weightings applied to more recent data points.
To make money and to outperform other managers on a consistent basis, there are two groups of stocks to fish in: high relative strength stocks and value stocks. IBD reminds us every day how powerful high relative strength stocks are with a picture of their 85-85 index. Shown below is the IBD 85-85 Index gaining +332.7% vs. the S&P 500 +22.% since November 13, 2000.
IBD’s research “shows that in every market over the last 50 years, the best stocks have had EPS and RS Ratings of 85 or better BEFORE they made their biggest gains.“ Our research shows that when you combine high relative strength stocks with a disciplined market timing strategy, the returns are even better.
Delta’s Market Sentiment Indicator (DMSI) is 54.3% down from 66.9%. The market has weakened again this week but remains bullish in territory and we recommend to be invested.