Wil

Wil

Am I correctly interpreting the symbol(s) FNV:GDX as comparing the gold mining stock FNV (on a relative strength basis) to the large cap gold miners ETF? FNV SEEMS to be close to breaking out to the upside, while when compared to the ETF which SEEMS also rising higher, but NOT as strong? Therefore, intuitively speaking, the symbol FNV:GDX seems not to accurately reflect that line of reasoning/comparison, by heading LOWER??? Your thoughts are greatly appreciated-Thanks in advance, Wil.

Wil

Thanks!!!!!!!!!

markd

Relative Strength is not a comparison of technical position. It only compares actual price performance over the selected period.

The ratio symbol compares the relative PRICE performance of the two symbols over the time period selected. So, if ABC has advanced 20 percent and XYZ has advanced 15 per cent, the Price-Performance line will be generally rising.

But, that says nothing about the technical position of either symbol. ABC may be in an up leg in a long term down trend, while XYZ is ranging in a long term up trend.

In your case, the relative weakness of FNV probably indicates that other symbols within the GDX etf are outperforming FNV - meaning, advancing in price more rapidly, at least for the time being. That may or MAY NOT indicate that those other symbols are a better choice. You would have to look at those charts for signs of strength or exhaustion as well. The chart is final word.

In general, a good pattern for RS (for example, the Price - Performance indicator with a ratio symbol, where the second symbol is the first symbol's industry , e.g. FLDM:$DJUSAM) is the RS line generally above a rising, or better yet, a just turning up mid-length MA of RS, e.g. MA63 (3 months).


Here's the Chart School article on Price Relative:

https://stockcharts.com/school/doku.php?id=chart_school:technical_indicators:price_relative