Relative Strength

Relative strength compares how a stock is performing against a benchmark — usually a broad market index or its sector — rather than looking at the stock's price on its own. A stock can be falling in absolute terms and still show strong relative strength, if it's falling less than the benchmark around it; the same comparison applies in rising markets, where a stock up 5% while its benchmark is up 12% is technically positive but relatively weak. Stocks showing relative strength during a market-wide decline are sometimes viewed as candidates to lead when the broader market recovers, on the logic that resisting the average decline signals underlying demand. Relative strength is a different concept from RSI (Relative Strength Index), despite the similar name — RSI measures a stock's own momentum against its own history, with no external comparison involved, while relative strength is entirely about the comparison to something outside the stock. A relative strength reading describes a past comparison; it doesn't guarantee that outperformance or underperformance continues.