A relative strength indicator that compares a stock's performance against an index by dividing their prices and plotting the GMMA to analyze trend strength and potential outperformance.
Explore complementary indicator rolesHow it works
The indicator divides the selected stock's price by a specified index or stock price, creating a new chart that shows relative performance. It simultaneously plots the Guppy Multiple Moving Average (GMMA) on this relative performance chart, using different colored EMAs for short-term (5-30 days in green) and long-term (75-200 days in red) trends.
By analyzing the distance and interaction between these short-term and long-term EMAs, traders can identify periods of outperformance or underperformance. When the short-term and long-term EMAs are expanding, it suggests the stock is outperforming the index, while crossovers indicate potential trend changes.
Why it may be useful
This indicator provides traders with a powerful tool to compare a stock's relative strength against a benchmark index, offering insights beyond traditional price analysis. It helps traders understand whether a stock is performing better or worse than the broader market, which is crucial for making informed investment decisions.
By visualizing relative performance and trend strength, traders can identify potential opportunities for entry and exit points. The GMMA component adds depth to the analysis by showing trend momentum and potential trend reversals, making it especially valuable for mid to long-term trading strategies.
When to explore it
This indicator is most effective for swing traders and investors focusing on medium to long-term market trends. It works best when comparing individual stocks against major market indices, providing a clear perspective on relative performance and potential investment opportunities.
Traders should use this tool when evaluating stocks for potential outperformance, sector rotation, or when seeking to understand a stock's performance relative to a broader market benchmark. It is particularly useful during periods of market transition or when comparing stocks within the same sector or across different market segments.
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What we’ve verified
Access, alerts and repainting behaviour have not been independently verified for this indicator. Check the creator’s current publication and settings.
General descriptions and classifications are recovered research. Verified details above identify the specific checks we have completed. Check the creator’s current publication for later changes.
