Short-Term Relative Strength
When it comes to market turns, traders want to know which stocks will
become the new leaders.
One way to spot this is by looking at relative strength.
From September 10 to the close on Friday, the Nasdaq dropped 246 points. In
looking at Oracle (ORCL),
we see that, not only did the stock not fall, but it rallied almost every day
since the market re-opened.
And what happened when the market rallied today? The Nasdaq gained 5.3%,
while ORCL rose over 16%.
The relative strength that was demonstrated from 9/17 through 9/21 was a
tip-off that ORCL would make a
nice move when the overall market rallied.