Short description
The Relative Strength Quotient (Price/Index) is a central concept which unifies momentum and breadth for stocks and sectors, and the powerful institutions know this in detail, leaving the ordinary citizen at a tremendous disadvantage. During the major market bottom in October 1998, the R.S. charts predicted that NASDAQ-100 and the Internet Sector were going to be the leaders of the future rally into 1999. And in March 2000, the R.S. charts also predicted the abrupt loss of leadership of NASDAQ-100 and Internet Sector. At the end of the 2000-2002 Bear Market, the R.S. charts predicted that Russell 2000 was going to lead the new bull market. During the second half of 2006, this time the R.S. charts predicted that Russell 2000 was losing long term future strength, and that large capitalization stocks were gaining leadership into 2007. The book requires patience and a knowledge of Technical Analysis, but the persistent reader will see why and how the majority often fall behind.
Long description
Relative Strength is a central concept which unifies momentum and breadth for stocks and sectors, and studying it in detail indirectly reveals the connections with many other important areas of Technical Analysis. During the major market panic which led to a bottom in October 1998, the Relative Strength charts predicted that NASDAQ-100 and the Internet Sector were going to be the leaders of the future rally into 1999. And in March 2000, the Relative Strength charts also predicted the abrupt loss of leadership of NASDAQ-100 and Internet Sector. At the end of the 2000-2002 Bear Market, the R.S. charts predicted that Russell 2000 and small stocks were going to lead the new bull market. During the second half of 2006, this time the R.S. charts predicted that Russell 2000 was losing long term future strength, and that large capitalization stocks were destined to become the leaders into 2007.
Review
The most exhaustive, in-depth study on this topic that I have read. The comprehensive back-testing and detailed comparative studies between indices and stocks show the predictive value of Relative Strength beyond a doubt. Brent L. Leonard, CMT Editor, TSAASF Review, Technical Securities Analysts Association, tsaasf.org. Traders and statisticians could greatly benefit from the insights presented here. Kirkus Discoveries, kirkusreviews.com.