Relative Strength

What is it? A stocks price movement, compared to the change in a relevant market index, such as the S&P 500. The typical timeframe is 12 months. Momentum investors like to buy stocks with high relative strength because they believe a stock that has a strong relative strength rating will continue to move higher. The strategy has worked well in bull markets, but it is a high-risk approach because these stocks are also likely to fall hard when the market tumbles.

Added By: Kevin

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