Anil Sir
Relative strength compared to what ?
If possible could you share the basic formula or skeleton for this?
Dear amit,
There are 'n' ways to calculate relative strength...
First a simple thing...what is intrinsic strength...its nothing but position of stock/index wrt to itself...whether its improving/deteriorating...
It can be seen with simply %change over 1week/4week...etc...etc...
For ex: if IT sector posting 3% gain this week and other sectors posted somewhat -ve to less then 3% gain, then It can be seen as potential candidate where intrinsic strength is improving...
The other one is relative strength...its nothing but position of stock/security wrt to stock/index...Here we are using sectoral index wrt index Sensex/nifty...
So how sectoral index are performing with respect to benchmark index like Nifty//Sensex.... If IT posting 3% gain and Sensex posting 2% posting gain. Then its clearly visible It outperforming Sensex here... or posing relatively better than other sectors...
First simple exercise on intrinsic strength can be done..for example...get 1 week return for all indices...and then just arranged them is ranking with ranking '1' as highest return over 1 week...so suppose you had 10 sectors...you will get ranking of all 10 sectors and highest ranking will be for sector which is clocking maximum gain over past 1-week...Thats it...
If we want to have relative strength then simply divide the 1week sectoral return by 1week index(sensex) to have ratio...now get these ratio for all sector..and then rank these ratio...thats it...Here we are using banchmark index Sensex, so its a relative way of calculation...
There are many ways of calculating relative strength...just search on net..i am using simplest example...