Mansfield Relative Strength

 

#relativestrength #stockpicking 

Inventor: George Mansfield; popularized by Stan Weinstein 

Made famous by Stan Weinstein. It compares a stock against its index: first the ratio (Stock / Index), then how far that ratio sits from its own long-term average, plotted around a zero line. Above zero means the stock is doing better than the market over the long run; below zero means worse. Note: this is comparative strength, not the RSI oscillator. 

Default period: 52 weeks (200 days) for the ratio’s average; weekly chart 

Line above zero indicates the stock is outperforming the index. Line below zero indicates it is underperforming. 

Useful readings: 

Crosses above zero: Stock starting to lead the market, classic Weinstein buy condition 

Crosses below zero: Stock starting to lag the market, avoid or exit 

Above zero and rising: Leadership strengthening, hold winners 

Above zero but falling: Leadership fading, tighten stops 

Stock breaks out AND line crosses above zero together: Highest quality breakout 

In a falling market, stocks holding above zero are the first to rally 

Objective rules: 

Bullish: Mansfield RS crosses above zero. 

Bearish: Mansfield RS crosses below zero. 

Breakout filter: Take price breakouts only in stocks with Mansfield RS above zero 

Portfolio rule: Hold only stocks with RS above zero; review any holding that drops below 

Leader rule: Among similar setups, pick the stock with the highest rising RS 

What makes it unique: 

It judges a stock only by whether it beats the market, the single question that drives professional stock selection. Weinstein made its zero line the gatekeeper for every breakout. 

The indicator table value in TradePoint & RZone also provides you with a list of all values of this indicator for any group of stocks. This will allow you to compare the readings of this indicator across different stocks.

This indicator is also available in the System Builder of RZone & TradePoint for all charting methods. Using the system builder, you can develop various strategies based on the different conditions already present in this indicator. Additionally, it can be used with other indicators or price patterns to develop effective trading strategies. For any group of stocks and market segments, you can scan and backtest stocks based on those strategies.

The indicator is applicable to all types of charting. Calculated based on the number of columns on P&F charts, bricks on Renko charts, lines on Line-break charts, candles on Heikin ashi charts, and lines on Kagi charts. While the formula and reading of the indicators remain the same, they become more dynamic on these charts.