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 ====== Price Relative / Relative Strength ======
-===== Introduction =====
+===== What Is the Price Relative Indicator? =====
-The Price Relative indicator compares the performance of one security to another with a ratio chart. This indicator is also known as the Relative Strength indicator or Relative Strength Comparative. Often, the Price Relative indicator is used to compare the performance of a stock against a benchmark index, such as the S&P 500. Chartists can also use the Price Relative to compare the performance of a stock to its sector or industry group. This makes it possible to determine if a stock is leading or lagging its peers. The Price Relative indicator can also be used to find stocks that are holding up better during a broad market decline or showing weakness during a broad market advance.
+Also known as the Relative Strength indicator or Relative Strength Comparative, the Price relative indicator uses a ratio chart to compare the performance of one security to another.
+The indicator is often used to do the following:
+  * Gauge a stock's performance against a benchmark index, such as the S&P 500.
+  * Evaluate a stock's performance relative to its sector or industry group so you can determine if a stock is outperforming or underperforming its peers.
+  * Identify stocks that either hold up well during broad stock market declines or exhibit weakness during market upswings.
 **Note:** At StockCharts.com, a **ratio ticker symbol** is used to create a Price Relative indicator. A ratio symbol consists of two ticker symbols joined together with a colon character (e.g., "IBM:$SPX", "$INDU:$GOLD"). The value of a ratio ticker symbol is equal to the close of the first symbol divided by the close of the second symbol.
-===== Calculation =====
+===== How To Calculate the Price Relative Indicator =====
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-The Price Relative indicator is simply the base security divided by the comparative security. Typically, the underlying security is a stock and the benchmark is the S&P 500. For example, chartists can use the Price Relative to show the performance of Starbucks (SBUX) relative to the S&P 500 ($SPX). This would simply be the price of Starbucks divided by the S&P 500. Starbucks is part of the consumer discretionary sector. Chartists could also view the performance of Starbucks relative to the Consumer Discretionary SPDR (XLY) with the appropriate [[docs>data#ratio_symbols_relative_strength|ratio symbol]] (SBUX:XLY). Chartists could also view sector performance relative to the S&P 500 (XLY:$SPX).
+The Price Relative indicator is simply the base security divided by the comparative security. Typically, the underlying security is a stock and the benchmark is the S&P 500. For example, chartists can use the Price Relative to show the performance of Starbucks (SBUX) relative to the S&P 500 ($SPX). This would simply be the price of Starbucks divided by the S&P 500. Starbucks is part of the consumer discretionary sector. Chartists could also view the performance of Starbucks relative to the Consumer Discretionary SPDR (XLY) with the appropriate [[https://support.stockcharts.com/doku.php?id=data#ratio_symbols_relative_strength|ratio symbol]] (SBUX:XLY). Chartists could also view sector performance relative to the S&P 500 (XLY:$SPX).
-{{chart_school:technical_indicators:price_relative:prel-1-sbuxsheet.png|Price Relative - Spreadsheet 1}}
+{{:technical_indicators:price_relative:prel-1-sbuxsheet.png|Price Relative - Spreadsheet 1}}
 {{:technical_indicators:price_relative:cs-pricerelative.xls?linkonly|Click here to download this spreadsheet example.}}
-The table above shows the Starbucks/S&P 500 Price Relative. The first value in row two is .0256 (30.66/1197.75). This ratio increases when Starbucks advances more than the S&P 500 or declines less than the S&P 500. This ratio decreases when Starbucks advances less than the S&P 500 or declines more than the S&P 500. For reference, the table also shows the percentage change in Starbucks and the S&P 500. The percentage change in Starbucks less the percentage change in the S&P 500 is also equal to the daily changes in the Price Relative. In row two, notice that Starbucks was down 2.66% and the S&P 500 was down 1.62%. The Price Relative moved lower (-1.04%) because Starbucks declined more than the S&P 500. Row three shows the Price Relative rising because Starbucks (+.50%) was up more than the S&P 500 (+.02%). The chart below shows the Price Relative in action.
+The table above shows the Starbucks/S&P 500 Price Relative. The first value in row two is 0.0256 (30.66/1197.75). This ratio increases when Starbucks advances more than the S&P 500 or declines less than the S&P 500. This ratio decreases when Starbucks advances less than the S&P 500 or declines more than the S&P 500. For reference, the table also shows the percentage change in Starbucks and the S&P 500. The percentage change in Starbucks less the percentage change in the S&P 500 is also equal to the daily changes in the Price Relative. In row two, notice that Starbucks was down 2.66% and the S&P 500 was down 1.62%. The Price Relative moved lower (-1.04%) because Starbucks declined more than the S&P 500. Row three shows the Price Relative rising because Starbucks (+0.50%) was up more than the S&P 500 (+.02%). The chart below shows the Price Relative in action.
 {{:technical_indicators:price_relative:prel-1-sbuxexam.png|Price Relative - Chart 1}}
-===== Interpretation =====
+===== How To Interpret the Price Relative Indicator =====
-The Price Relative is used to gauge relative strength, which is important when it comes to stock selection. Many portfolio managers compare their performance to a benchmark, such as the S&P 500. Their goal is to outperform that benchmark. In order to achieve this goal, managers often look for stocks that are showing relative strength. Enter the Price Relative. The Price Relative rises when a stock shows relative strength and is outperforming its benchmark. Conversely, the Price Relative falls when a stock shows relative weakness and is underperforming its benchmark.
+The Price Relative is used to gauge relative strength, which is important for stock selection. Many portfolio managers compare their performance to a benchmark, such as the S&P 500. Their goal is to outperform that benchmark. Managers often look for stocks that show relative strength to achieve this goal. Enter the Price Relative. The Price Relative rises when a stock shows relative strength and outperforms its benchmark. Conversely, the Price Relative falls when a stock shows relative weakness and is underperforming its benchmark.
-There are a few ways to use the Price Relative. First, chartists can perform simple trend analysis to determine the direction of the Price Relative. This can be based on the actual trend, support/resistance breaks, moving averages or other indicators. Second, chartists can look for bullish and bearish divergences in relative strength to warn of a potential reversal in the stock price.
+There are a few ways to use the Price Relative. First, chartists can perform simple trend analysis to determine the direction of the Price Relative. This can be based on the actual trend, support/resistance breaks, moving averages, or other indicators. Second, chartists can look for bullish and bearish divergences in relative strength to warn of a potential reversal in the stock price.
 ===== Trend Identification =====
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 {{:technical_indicators:price_relative:prel-4-mabedd.png|Price Relative - Chart 4}}
-===== Conclusion =====
+===== The Bottom Line =====
-Even though this article focused on using the Price Relative for stocks, the Price Relative can also be used for broad market analysis. The stock market can be broken down into nine sectors represented by the sector SPDRs. Chartists can maintain charts with Price Relatives for these nine sectors to determine the leaders and the laggards. The market is in offensive mode when the technology and consumer discretionary sectors lead. The market is in defensive mode when consumer staples, healthcare and utility sectors lead. Once the leading sectors have been determined, chartists can then look within these sectors to find the leading stocks. Sectors that show relative weakness can be avoided to help narrow the search. As with all indicators, it is important to use the Price Relative in conjunction with other technical analysis tools. [[:technical_indicators:introduction_to_technical_indicators_and_oscillators#momentum_oscillators|Momentum oscillators]] and [[:chart_analysis:chart_patterns|chart patterns]] can be used to confirm or refute relative strength or relative weakness.
+Even though this article focused on using the Price Relative for stocks, the Price Relative can also be used for broad market analysis. The stock market can be broken down into nine sectors represented by the sector SPDRs. Chartists can maintain charts with Price Relatives for these nine sectors to determine the leaders and the laggards. The market is in offensive mode when the technology and consumer discretionary sectors lead. The market is in defensive mode when consumer staples, healthcare, and utility sectors lead. Once the leading sectors have been determined, chartists can then look within these sectors to find the leading stocks. Sectors that show relative weakness can be avoided to help narrow the search. As with all indicators, it is important to use the Price Relative in conjunction with other technical analysis tools. [[:technical_indicators:introduction_to_technical_indicators_and_oscillators#momentum_oscillators|Momentum oscillators]] and [[:chart_analysis:chart_patterns|chart patterns]] can be used to confirm or refute relative strength or relative weakness.
 ===== Using with SharpCharts =====
-The Price Relative is available in SharpCharts by using the "Price" indicator with [[http://stockcharts.com/docs/doku.php?id=data#ratio_symbols_relative_strength|a "Ratio" ticker symbol]] (e.g., "IBM:$SPX"). First, select the "Price" indicator. Second, in the parameter box, enter the symbol for the base security followed by a colon (":") and then the symbol for the comparative security.
+The Price Relative is available in SharpCharts by using the "Price" indicator with [[https://support.stockcharts.com/doku.php?id=data#ratio_symbols_relative_strength|a "Ratio" ticker symbol]] (e.g., "IBM:$SPX"). First, select the "Price" indicator. Second, in the parameter box, enter the symbol for the base security followed by a colon (":") and then the symbol for the comparative security.
-Note that you can also use the "$SECTOR" and "$INDUSTRY" pseudo-symbols inside a ratio symbol. We will automatically replace those symbols with the appropriate sector or industry ETF/index.  For example, "IBM:$SECTOR" is the same as "IBM:XLK" inside of a SharpChart.
+You can also use the "$SECTOR" and "$INDUSTRY" pseudo-symbols inside a ratio symbol. We will automatically replace those symbols with the appropriate sector or industry ETF/index.  For example, "IBM:$SECTOR" is the same as "IBM:XLK" inside of a SharpChart.
 The Price Relative can be placed above, below or behind the price plot of the base security. Placing the indicator "behind price" makes it easy to compare the two lines. The chart below shows the Price Relative (pink) behind the price plot. Notice the bullish divergence in August and the bearish divergence in December. Use "Advanced Options" to add a moving average or another indicator to the Price Relative.
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 {{:technical_indicators:price_relative:prel-6-shch.png|Price Relative - SharpCharts}}
+===== Price Relative Indicator FAQs =====
+==== Is the Price Relative Indicator known by any other names? ====
+Yes, it's also called the Relative Strength Indicator or Relative Strength Comparative.
+==== Can the Price Relative Indicator be used beyond individual stocks? ====
+Yes, the Price Relative can be utilized for broad market analysis, helping determine leaders and laggards among sectors. The results can then guide investors toward the leading stocks within the top-performing sectors.
+==== How is the Price Relative Indicator commonly used? ====
+It's frequently used to gauge the performance of a stock against a benchmark index, such as the S&P 500. It can also compare a stock's performance against its sector or industry group.
+==== What is a ratio ticker symbol on StockCharts.com? ====
+It's a tool used to create a Price Relative indicator. A ratio symbol consists of two ticker symbols with a colon between them (e.g., IBM:$SPX). The value of this symbol represents the close of the first symbol divided by the close of the second.
+==== What are bullish and bearish divergences in the context of the Price Relative? ====
+A bullish divergence signals that a stock displays relative strength during a decline and will likely lead when the market turns upward. A bearish divergence indicates relative weakness during a price ascent, hinting that the stock may decline sharply when the market drops.
 ===== Further Study =====