Relative Strength

Ryan demonstrates his rapid first-pass process live: when he pulls up a stock he's never seen, his eye goes immediately to uptrend, proximity to highs, and whether it's extended. IBM is dismissed in a fraction of a second — gap down, poor relative strength, downtrend. ASIX gets more attention: it's in an uptrend and near its high, but the base is only two weeks long, and he prefers longer bases because shorter consolidations tend to produce shorter moves. The buy point is defined by drawing a line over the majority of the base, not the absolute high. Speed in initial screening is the feature that lets you spend real analytical time only on the setups that deserve it.

Ryan explains the critical distinction between the RS rating (the 12-month percentile number) and the RS line (price performance relative to the S&P 500 plotted on the chart daily). The rating can be misleading: a stock that ran 300% and then fell 50% may still show a 99 RS rating because the prior gain dominates the calculation. The RS line shows actual relative performance direction in real time. He looks for the RS line to be making new highs alongside or ahead of price. A stock where price is still at highs but the RS line has started rolling over is already losing institutional sponsorship before the chart itself shows it — that divergence is one of his most important early warning signals.

"I put a lot more weight into how this stock is acting relative to the S&P — you can see real divergences when stocks are making new highs and the relative strength line is not."

April 27th was the trade that changed Gon's trajectory — a tight base formed on top of a prior base, entered with full size, and ran significantly. He recognized the VCP-like characteristics: the stock was consolidating above the lows of the prior base, showing strong relative strength. Because the risk was tiny relative to the potential reward, he went in with conviction. The trade worked — but more importantly, it was a validation of his ability to recognize high-quality setups in real time, not just in hindsight. It was the moment his chart reading crossed from academic to applied.

Tito's methodology starts with stock selection. The bread and butter is finding stocks showing relative strength versus the indices, ideally with a catalyst behind them. He cites Nvidia in 2024 and SMCI as examples — stocks with strong RS and identifiable tailwinds. When you start with the right stock, you tilt the odds in your favor before worrying about entry timing. He learned this from studying the US Investing Champions, who consistently emphasize stock selection as the foundation that all other decisions rest on.

When asked how he scans for candidates, Kristjan is direct: scan for the strongest momentum stocks — those with high relative strength and significant recent price performance. The pattern itself cannot be automated; you have to learn to see it. What he looks for is linearity: how orderly is the pullback or consolidation after the previous leg higher? A disorderly, choppy base is a red flag; a clean, tight range that holds its structure signals institutional accumulation. He notes he now mostly trades large caps because of liquidity constraints at his size, but momentum trading in mid and small caps produced many of his best historical returns when the account was smaller.

Williams explains why he considers comparative strength — comparing related markets like corn against soybeans, or heating oil against crude oil — more actionable than traditional relative strength rankings across all stocks. A market that has held up best during sector declines and rallied hardest within its group is the one to buy; the weakest within the group is the one to sell short. He describes how his market focus evolved from thin, seasonal markets like eggs to deep, liquid futures — Treasury bonds and stock index futures — where his own orders cannot become the market and his stops fill as intended.

"Comparative strength is much more important than relative strength."

After the drawdown and a break for dental admissions prep, Ted discovered William O'Neil's How to Make Money in Stocks and then built out the broader trading canon: Reminiscence of a Stock Operator, the Market Wizards series, Minervini, and Weinstein. The CANSLIM framework organized his thinking: Current quarterly earnings (25%+ YoY growth), Annual earnings trajectory, New product or service, Supply and demand reading via price-volume, Leader vs. lagger in relative strength, Institutional ownership quality, and Market direction as the most important overlay. Having prior market experience meant he could immediately map every principle to something he had lived through.

"No matter what, just reading the books or taking courses, it's not going to work. Like you need to be in there."

For Ted's intermediate-term trend-following system, the optimal entry conditions arrive after a multi-week pullback or bare market correction: stocks building symmetrical bases, RS lines near all-time highs, higher lows, right side of the base developing. The EMA stack (21 above 50 above 200, all rising) with abundant fresh breakouts signals the best entry windows. Portfolio feedback is the real-time confirmation: if you are not struggling much, your edge is in favor. In November 2024, setups are near non-existent — stocks that fell 40-50% need months of institutional accumulation to carve proper bases before new uptrends can develop. Ted will wait for base completion and the EMA stack to realign before getting aggressive again.

"Listening to your own portfolio feedback is probably the most important thing for identifying if your edge is in favor."

Day trading is extremely difficult — you need to come up with a new, bright idea every single day in a market that may not be offering any good setups. Swing trading flips this: your homework is done at night when the market is closed. Ariel’s scanning process starts on FinViz with industry group relative strength over one, three, and six months to identify where institutional money is flowing. Then he filters for stocks above the 200-day and 50-day moving averages, adds fundamental criteria (good earnings and sales quarter-over-quarter), and checks which individual names are holding up best. "Now your universe of stocks just went from everything to the best stocks in the best groups in the market." Limit orders with stops at prior day lows mean a trade can trigger while you’re at a 9-to-5 job. Even your aunt "can slow down in the evening with a glass of wine and say, ‘What are the best groups? Which ones have good earnings and sales?’"

"I don’t think I’m some kind of an anomaly... Swing trading is one of those things where your homework is done at night when the market is closed. I know exactly where I want to be with the four, five or six names on watch for tomorrow, the night before."