Key takeaways
- RS compares a stock's return to the broad market over the same window.
- SovaScan scores RS from 1 to 100 using a 63-day return versus the S&P 500.
- An RS of 80 or higher typically marks a true market leader.
- RS is not the same as RSI, which measures a stock against its own recent price.
A relative strength (RS) rating measures how a stock is performing compared with the broad market over the same period. SovaScan scores it from 1 to 100 by comparing a stock's 63-day return to the S&P 500. A high reading, typically 80 or above, means the stock is outpacing the market and is therefore a leader, which is exactly where momentum breakouts tend to come from.
What relative strength actually measures
Relative strength answers one question: is this stock stronger or weaker than the market right now? A stock that rises 20 percent while the S&P 500 rises 5 percent has strong relative strength. A stock that rises 5 percent while the market rises 20 percent is lagging, even though it is technically up. The comparison to the market is the whole point.
How the RS score is calculated
SovaScan looks at a stock's price change over the last 63 trading days, roughly one quarter, and compares it to the S&P 500 over the same window. That relative performance is then mapped onto a 1 to 100 scale, where higher means stronger. The fixed window keeps every stock measured the same way, so the score is comparable across the whole universe.
- 1 to 100
The RS scale, where higher means stronger versus the market.
- 80+
The reading that typically marks a genuine market leader.
- 63 days
The lookback window, roughly one calendar quarter.
What counts as a good RS rating
As a rule of thumb, an RS of 80 or higher marks a leader worth watching, and the strongest breakout candidates often sit in the 90s. A reading below 50 means the stock is lagging the market, which is rarely where you want to be buying breakouts. Rising RS is also a good sign on its own, because it shows money rotating into the name.
RS rating is not RSI
These two are easy to confuse. Relative strength compares a stock to the market. RSI, the Relative Strength Index, is a momentum oscillator that compares a stock to its own recent price action to flag overbought or oversold conditions. They share a name but answer completely different questions, so do not treat a high RSI as a high RS rating.
Why leaders have high relative strength
Strong stocks tend to stay strong. This well-documented momentum effect is why relative strength is so useful: the names already outperforming are statistically more likely to keep outperforming over the following weeks and months. Screening for high RS is a fast way to put that tendency on your side.
Frequently asked questions
What is a good relative strength rating?
- On a 1 to 100 scale, an RS rating of 80 or higher generally marks a market leader, and the strongest breakout candidates often score in the 90s. A reading under 50 means the stock is lagging the broad market.
What is the difference between RS rating and RSI?
- RS rating compares a stock's performance to the broad market, so it ranks leaders against laggards. RSI is an oscillator that compares a stock to its own recent price to flag overbought or oversold conditions. They are different tools despite the similar names.
How is SovaScan's RS score calculated?
- SovaScan compares a stock's 63-day return to the S&P 500 over the same window and maps that relative performance onto a 1 to 100 scale, so every stock is measured the same way and the scores are comparable across the universe.
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