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To say the markets have been volatile is quite the understatement.
For instance, The Dow Jones Industrial Average has seen a 1,000-point price swing in one day. It's not uncommon to see less "severe" price swings of 300 to 400 points these days, too. And while the S&P 500 is up, it's only by 0.66% – a measly less than 1% that was far more stressful for many people to attain than just sitting out altogether.
To make things even more difficult for investors and traders alike – these aren't one-directional swings. So one second, the market's skyrocketing 400 points, and the next, it's taking a 500-point plunge.
Needless to say, 2018 has not provided us with the consistent and stable market that 2017 did at one time.
But there's one sector that's been ignoring these turbulent conditions – and could deliver your next triple-digit win…
See, when this type of volatility arises, I always look for the sector/sectors that are boasting consistent price patterns.
While doing this, I analyze the same period of time for different stocks and sectors to see which is outperforming the other. This is referred to as positive relative strength.
One way to calculate relative strength is to take the rate of change of one sector and divide it by the rate of change of the other over that same period of time. A calculation of greater than 1 is deemed relatively strong, whereas a result of less than 1 indicates the sector or stock is weak or showing weakness.
An even simpler way to measure positive relative strength is to compare the percentage returns. The one with the highest is doing the best.
About the Author
Tom Gentile is one of the world's foremost authorities on stock, futures and options trading.
With more than 25 years' experience trading stocks, futures, and options, Tom's style of trading systems and strategies are designed to help individual investors propel themselves past 99 percent of the trading crowd.