This implementation of the RS Line mimics how Investor's Business Daily and CANSLIM investors measure growth stock performance versus the S&P 500 .
If you are looking at a weekly chart, the RS Line is the performance of the stock over the past week versus the S&P 500 over that same time frame. The same logic applies to the daily and monthly charts, only the time frames are different.
If a stock moves up for the day/week/month and the S&P 500 does not, the RS Line will move up. If a stock ends the day/week/month flat, yet the S&P 500 moves up, the RS Line will go down.
- Look for an upward sloping line.
- The steeper the line, the better.
- Can be used for viewing long-term trend.
✓ Support for any index, defaults to S&P 500 (SPX).
✓ Default plot color now shows on both dark and light modes.
The max vertical offset on where to show the RS Line is now 200. This is necessary to accommodate scaling requirements for some indexes.
One helpful tool when viewing an RS Line is to use a trendline, which can provide insight into the bigger picture performance of a stock versus the S&P 500. With this release of the RS Line you can now configure two trendlines that will be drawn for you, based on the criteria you specify.
The trendlines will be colored green or red based on the direction of the trend. You can also configure how far to look-back for each line, providing information for both short-term and long-term traders. For example, if you set a trendline look-back to 10, it will look back 10 days on a daily chart, 10 weeks on a weekly chart, etc
The configurable trendlines offer the following features:
■ Trendlines can be used on any timeframe
■ Trendlines are automatically colored based on the direction:
green for uptrend, red for downtrend
■ Plot up to two trendlines
■ Trendline width can be adjusted
■ Configurable look-back values
Two examples are shown below: APPL and CRSR
The following new features have been added:
■ Draw most recent high based on your preferred look-back range
■ Set color preferences for RS Line
Please leave a comment if you have suggestions on features you'd like to see.
More updates coming soon...
■ Visual callout to show RS Line at new high
■ Configurable callout shape and color
■ For an IPO, verify look-back date range.
■ Visual callout to show the RS Line at a new high before the price reaches a new high.
■ Visual callout to show the price at a new high.
Historical research of past big winners has shown that an RS Line at a new high before the price reaches a new high, may proceed a significant move up. This bullish signal is now much easier to identify.
Example #1 - Microsoft in 1986
Over approximately 8 months, MSFT was up over 200% before a decisive close below the 50-day SMA.
Example #2 - OKTA in 2020
A more recent example is OKTA. In just 5 months there was a 50% move up before closing below the 50-day SMA.
■ Added an option to show a configurable moving average of the RS Line.
■ Minor changes to default settings.
■ Add an option to show/hide RS Line recent high line.
■ Change order of various Settings for easier navigation.
Given the indicator supports any index to gauge relative performance, as more indexes were tested, it became clear a wider range of offset values for vertical placement was needed.
■ The vertical offset of the RS Line can be between 1 and 1500.
■ Update Settings dialog with section titles to make navigation easier.
■ RS Line only on daily, weekly and monthly charts as intraday skews the chart.
■ Optional moving average is now shown only on daily, weekly and monthly charts as intraday skews the chart.
■ Minor updates so the RS Line and related information are only shown on daily, weekly and monthly charts.
■ Changes to the Settings dialog to simplify the user interface.
■ RS Line is no longer displayed on futures or indexes as these charts can becomes skewed.
■ Updates to layout and color configurations.
■ Minor change to scaling of the chart.
■ Updates to RS Line layout.
■ Customization of line colors and width.
■ Simplification of Settings dialog.
■ Auto-generated trendline updates.
■ Specify timeframe(s) to show the RS Line.
■ Updates to trendline calculations.
■ RS Line and related data no longer shown for indexes and futures.
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- One challenge is that the "bubble" indicating a new high may show up multiple times during any interval. For example, when on a daily chart the bubble may be shown and if at some point during the day the price goes down so it is no longer a new high, the bubble will be hidden. If you are a MarketSmith user, the same concept applies there as well.
- What's the best way to indicate on the chart that a recent high has occurred on previous bars?
I'll give this some additional thought. Thanks for the suggestion.