RPS stands for Relative Price Strength, which refers to the relative price strength of a stock. It is a metric used to measure the performance of a stock in comparison to that of the entire market over a certain period in the past. It evaluates whether the performance of a stock is better or worse than the market average by comparing the price increase of an individual stock with that of other stocks in the market. A high RPS value usually indicates that the stock has shown strong performance within its calculation period and is likely to be an investment opportunity worthy of attention.
Relative Price Strength was put forward by William J. O’Neil in his book "How to Make Money in Stocks". O’Neil used RPS to measure the performance of a stock relative to the entire market over a certain period in the past and regarded it as an important tool for screening high-quality stocks.
Calculate the increase rate T of the stock's closing price on a certain day compared to its closing price N days ago. N can be 20, 50, 120, 250, etc. Then normalize and rank all the stock increase rates T1, T2... Tn. Finally, obtain the RPS value based on the comparison results. This value is usually presented as a percentage, representing the performance strength of the stock relative to the market. In most cases, the RPS value is converted into a ranking value ranging from 0 - 99 or 1 - 100 to reflect the strength or weakness of the stock more intuitively. RPS Score (Ranking): If the RPS score ranges from 0 - 99, 0 indicates the weakest and 99 indicates the strongest. For example, an RPS score of 90 means that the stock has outperformed 90% of other stocks in the market within the past statistical time interval.
For example, if a stock's calculated RPS for 20 days is 95, it is recorded as: RPS20 = 95, indicating that the stock's price increase in the past 20 days is better than that of 95% of the stocks in the market.
O’Neil believed that before a stock's main uptrend starts, the RPS value is usually around 87. Therefore, we set the condition that the RPS strength reaching 90 is one of the criteria for stock selection.
The calculation method for sector RPS is the same.
RPS has a wide range of application values in stock market analysis. The common application scenarios are as follows:
Stock Selection: Investors can use the RPS indicator to screen stocks that perform stronger than the overall market. These stocks usually have greater upward potential and better investment opportunities. Stocks with higher RPS scores often attract more market attention and may continue to perform well in the future.
Trend Judgment: By observing the changing trend of RPS, investors can judge whether a stock is in a strong upward trend. If the RPS value keeps rising and remains at a relatively high level, the stock may have significant upward potential. Conversely, if the RPS value continues to decline, it may indicate that the stock is about to enter an adjustment or downward stage.
Risk Control: RPS can also help investors identify stocks with relatively weak performance. These stocks may face greater downside risks, so investors need to be cautious. Stocks with lower RPS scores usually receive less market attention and may have potential risks.
Portfolio Management: RPS can be used to construct and optimize investment portfolios. Investors can improve the overall performance of the portfolio by selecting stocks with higher RPS scores and reduce risks through diversified investments.
High Relativity: RPS obtains results by comparing the performance of stocks with that of the market or benchmark indices, so it has relatively strong relativity. This helps investors judge the strength or weakness of stocks more accurately.
Easy to Understand: The calculation method and application process of RPS are relatively simple and clear, making it easy for investors to understand and use.
Wide Applicability: RPS is applicable not only to individual stock analysis but also to the analysis of the entire market or industry sectors.
Affected by the Market: The calculation results of RPS are influenced by the overall trend of the market. In the context of the overall market rising or falling, the RPS values of individual stocks may be distorted to some extent. For example, in a bull market, almost all stocks perform well and RPS scores may generally be on the high side; while in a bear market, almost all stocks perform poorly and RPS scores may generally be on the low side.
Limited by Time Period: The calculation results of RPS rely on specific time periods. RPS values under different time periods may vary significantly, so investors need to choose appropriate time periods carefully. For example, short-term RPS is suitable for capturing short-term momentum, while long-term RPS is more suitable for evaluating long-term trends.
Unable to Predict Specific Prices: Although RPS can help investors judge the strength or weakness of stocks and the trend direction, it cannot accurately predict the specific prices of stocks. RPS is just a relative strength indicator and cannot be used as the sole basis for buying and selling.
Stocks We provide the daily calculation and settlement results of RPS50, RPS120, and RPS250 for each stock. Corresponding charts of RPS50, RPS120, and RPS250 are shown below the daily line chart on the home page of each stock.
Sectors We provide the daily calculation results of RPS5, RPS10, RPS15, and RPS25 for relevant sectors. Corresponding icons of RPS5, RPS10, RPS15, and RPS25 are shown below the daily line chart on the home page of each sector.