What Is The Absolute Strength Rating?

The Absolute Strength (AS) Rating represents a fundamental metric within Deepvue, designed to evaluate a stock’s performance by comparing its price movement to every other stock in the database. Unlike other analytical metrics, the AS Rating provides an unweighted, direct measure of a stock’s strength, focusing purely on its price performance over time.

The Absolute Strength Rating acts as a “pure” indicator of a stock’s momentum. giving traders a clear view of momentum based on price movement alone.

How Absolute Strength Differs From Relative Strength

While Relative Strength is more complex, the Absolute Strength Rating focuses on raw price performance. The AS Rating gives you a simple, no-frills look at price action.

The Relative Strength Rating uses a formula that weighs recent time frames, offering a more nuanced perspective.

The key distinction lies in their approach: The Absolute Strength Rating gives you the raw price performance, while the Relative Strength Rating offers a market-relative perspective.

Why Understanding The AS Rating Matters

The Absolute Strength Rating strips away complexities, focusing on raw price performance. Investors can easily focus on the stock’s price momentum, which can reveal trends or opportunities not visible through other metrics.

Strategically Combining the AS Rating with other ratings like the Relative Strength Rating or EPS Rating allows for a comprehensive analysis. This approach helps traders identify stocks that not only exhibit robust price performance but also outperform their peers under similar market conditions while maintaining solid fundamental metrics.

Real-world Examples Of Using The AS Rating

In practice, a high Absolute Strength Rating shows that a stock has strong upward momentum based on its historical and current price performance. This can be a sign that the stock might continue to do well in the future.

The leading growth stock of 2024 had an Absolute Rating of 98 as it progressed into new all-time highs.

On the flip side, a low AS Rating suggests a lack of momentum. These stocks might underperform in the future, making them candidates for avoiding or even short selling.

During the same time period, SMCI had an AS Rating of 3 as it found new lows from over a year ago.

How The Absolute Strength Rating Is Calculated

The AS rating measures how much a stock’s price has changed, in percentage terms, over a certain time frame.

AS = (current price – prior price) / prior price x 100

The resulting calculation is then ranked against all other stocks in Deepvue’s database. The higher the rating the stronger the price performance.

Deepvue’s AS Ratings

• 1-Month: Provides insights into the very short-term absolute strength of a stock.
• 3-Month: Offers a short-term view into a stock’s inherent momentum and strength.
• 6-Month: An intermediate-term evaluation of a stock’s absolute strength.
• 12-Month: Gives a long-term perspective of a stock’s absolute strength, crucial for long-term investment decisions.

Identifying Strong vs. Weak Stocks

By understanding and utilizing the Deepvue Absolute Strength Rating, investors can target stocks likely to outperform their peers in the market. This metric not only aids in identifying stocks with strong performance but also helps in recognizing leading groups.

Deepvue’s Data Panel

Click on the Data Panel Icon to open all customizable settings.

To optimize your trading strategy, design a tailored Data Panel focused on Absolute Strength (RS) metrics. Here’s how you can customize it:

• Select Your Timeframe: Adjust the time periods for which you want to analyze Relative Strength. This flexibility allows you to align the AS data with your trading horizon, whether you’re a day trader, swing trader, or long-term investor by focusing on 1 day, 1 week, 1 month, or multiple months.
• Integration With Your Trading Strategy: If your strategy involves other factors like volume, volatility, or fundamental data, integrate these ratings into your data panel alongside other performance metrics. Add the AS Rating to accompany EPS and Sales data, ADR or ATR percentages, and Average Volume.

Deepvue’s Column Settings

In a similar fashion to the Data Pabnel, Deepvue users can create custom Column Settings to tailor to their needs.

To enhance your trading approach, create a custom Data Panel centered on Absolute Strength (AS) indicators. Here’s how you can adapt it to your needs:

• Timeframe Comparisons: Compare how the RS Rating has changed from a shorter to a longer timeframe. Choose the periods over which you analyze Relative Strength, whether it’s weekly or monthly, and look for an increasing RS Rating.
• Compare Other Ratings: Use the RS and EPS Ratings to compare the AS Rating.
• Add Other Momentum Indicators: Create a quick visual for analyzing the strength of a stock’s trend. Add Daily and Weekly Closing Ranges, Volume Run Rate, and other Industry Rankings.

Personalizing your Data Panel and Column Settings with these elements enables powerful tools at your fingertips to help identify the best stocks by focusing on Relative Strength. With these personalized settings, your dynamic workspace helps quickly filter stocks to easily analyze and react to stock performance trends.

How To Find Stocks With Strong Absolute Strength: Screening For Stocks With High AS Ratings

Whether you’re a new investor or an experienced trader, understanding the Deepvue Absolute Strength Rating can help you navigate the stock market more effectively. Incorporate the RS Rating into your screening routine to ensure you are looking at stocks outperforming the market.

Look for stocks that have an RS Rating of 80 or above with simple liquidity parameters.

Look for stocks that have an RS Rating of 80 or better across multiple timeframes.

Key Takeaways: Harnessing The Absolute Strength Rating

The AS Rating is a straightforward metric that evaluates a stock’s performance on its absolute price movement, offering an unfiltered view of its price performance without any weighting or adjustments.

The AS Rating is crucial for investors looking for stocks with strong price momentum or identifying those lacking in strength. A high AS Rating can signal buying opportunities, while a low rating might suggest potential for underperformance.

Your objective is trading stocks with huge price movements that are outperforming the market. Concentrate on stocks that continuously have strong price momentum as evidenced by a high Absolute Strength Rating

Focus on stocks with an AS Rating over 80. The best stocks often show a rating above 90 as they start to trend higher.