Relative Strength (RS) is the most widely used momentum measure in trend-following trading. The first thing to clear up is that it is an entirely different concept from the similarly named RSI (Relative Strength Index). Where RSI is an oscillator that reads whether a single stock's price is overbought or oversold on a 0–100 scale, the RS discussed here is a relative measure that expresses how much stronger a stock is compared with the entire market as a percentile rank.
RS Isn't "How Much It Rose" but "Is It Stronger Than the Rest"
Suppose a stock rose 10% over a month. That number alone can't tell you whether it's strong. If the whole market rose 15% in the same period, the stock is actually a laggard; if it rose 10% while the market fell 5%, it's a remarkable leader. RS converts exactly this "relative position versus everyone else" into a rating from 1 to 99. An RS of 99 means the top 1% by momentum across the whole market — the strongest stocks.
Weighted RS Puts More Weight on Recent Periods
Trend Screener and other classic trend-following tools use a weighted average that emphasizes recent periods rather than a simple one-year return. Specifically, the last 3 months get 40%, and the 6-, 9-, and 12-month windows get 20% each.
The reason is clear: a stock that was strong a year ago but has since lost steam should not get the same score as one that has broken out explosively over the last three months. By placing the most weight on the nearest quarter, you can quickly catch the next generation of leaders — the ones that make new highs first as the market bottoms and turns.
Reading RS Alongside Volume and Industry
You don't trade on RS alone. In practice, overlapping three things raises your confidence.
- Volume: a high-RS stock that trades heavy volume on up days is likely under accumulation by institutions and foreign investors. Conversely, an RS that rose without volume is weak on durability.
- Industry strength: a trend lasts longest when a strong stock sits inside a strong industry. It's efficient to check the top groups by industry RS first in Trend Screener's Industry Analysis, then pick the high-RS names within them.
- Trend structure: even with a high RS, if the moving averages aren't aligned it may be a temporary bounce. Only a stock that also passes all 8 Trend Template conditions (8/8) can be read as being in a Stage 2 uptrend.
Narrowing It Down at Once with the Leaders Filter
Cross-checking these three by hand every time is tedious. So Trend Screener provides a Leaders filter that keeps only stocks with "an RS of 90 or higher whose industry ranks in the top 10 by industry RS." It's William O'Neil's "Leader or Laggard" principle applied in a single click.