Breakoutwatch.com Chart Help Page
For a description of the data provided in each chart, click one of these links:
Chart Period | Daily Price Chart | Daily Volume Chart | 50 and 200 Day Moving Averages | RS Line | RS Rank | Up/Down Volume Ratio
For help in interpreting the data, click one of these links:
RS Line as an Indicator of Strength | RS Rank as an Indicator of Strength | U/D as an Indicator of Strength
Daily charts can drawn for 12, 9, 6, and 3 month periods using the selection box in the upper right. We will add longer time frames and weekly data in the future.
This chart shows the daily open, high, low and close prices in candlestick format. The body shows the open to close relationship and the vertical line shows the day's range. Days on which the stock closed higher than it opened are shown in blue, while days on which the stock closed lower than it opened are shown in red. The candlestick body will only be visible if the range of the chart is 9 months or less. For longer time frames, only a vertical bar will be visible. Since it is the most recent price action that is the most significant when using candlestick charts for technical analysis, this is not a problem. If the candlesticks are not visible, shorten the time frame you are viewing
Move your mouse over the vertical bar on any day and the daily price, volume, RS Rank and Up/Down Volume ratio will appear in a box on the left side of the display. There may be a moments hesitaion before the box appears, depending on the speed and available memory of your computer.
Overlayed on the price bars are the 50 and 200 day moving averages.
For more information on interpreting candlestick chart patterns we recommend 'Profitable Candlestick Trading' by Stephen W. Bigelow available in hardcover or electronic download from Amazon.
This chart shows the daily volume in thousands of shares (k) traded as vertical bars. Volume is shown in blue if the stock closed up on the day compared to the previous day, and in red if the stock closed down compared to the previous day.
The 50 day volume moving average line is overlayed on the volume bars.
If the volume on any day exceeded 3 times the moving average, then the volume is shown as equal to three times the moving average. This is to prevent the range of high to low volume days being so large as to mask the detail in the volume chart.
50 and 200 Day Moving Averages (50dMA and 200dMA)
50 and 200 day moving averages are most often used to describe intermediate and long term price trends. Stocks trading above their moving averages for some time are considered to be in an uptrend. Think of the price as pulling the moving average along for the ride up. Conversely, stocks trading below their moving averages for some time are considered to be in a downtrend. The falling price pulls the moving average down as price continues to decline. If a stock is currently in an uptrend and breaks below a supporting moving average, it may indicate that a correction is underway. Prices that rise very quickly and move away from the moving average dramatically may also indicate an impending correction, as this may signal near term price overshoot. Avoid stocks trading below their 200 day moving averages and more than 15% below their 50 day moving averages.
Relative Strength Compared to S&P500 (RS Line)
The RS Line measures the performance of a stock against the market as a whole, as measured by the S&P500 Index (SPX). If the relationship is graphed, the performance of the stock relative to the market over time is easily demonstrated.
In order to calculate the value of the RS Line itself, the price of the stock is divided by the price of the S&P500 Index at the close of each trading day.
RS Line Value = Price of Stock / Price of SPX
RS Line as an Indicator of Strength
This indicator is more useful in the near term than the RS Rank, as it provides instantaneous feedback on the stock's relative price performance. Here, it is not the value of the RS Line, but instead the direction of the RS Line that is meaningful. An RS Line that is rising indicates the stock is increasingly outperforming the market as a whole. An RS Line that is decreasing indicates the stock is underperforming the market. An RS line that is moving sideways indicates the stock is keeping pace with the market. The RS Line should be rising over the intermediate term to indicate the stock's strength relative to the market is increasing. Watch for divergences in the RS Line. For example, if price is rising, but the RS Line is declining, this indicates the stock is underperforming the market, despite the rise in price. Strong stocks will show a rising RS Line. Often the line itself will make new highs even before the stock breaks out of a basing pattern.
Relative Strength Rank against all NYSE, AMEX and Nasdaq Stocks (RS Rank)
RS Rank is a gauge of a stock's price performance vs. all other stocks in the NYSE, AMEX and Nasdaq. The change in each stock's price for each of the previous four quarters is used to derive a weighted price performance for each stock. This weighted price performance is then used to rank all stocks against each other. Each stock is then given an RS Rank from 99 (highest) to 1 (lowest). This value is updated daily, so is a dynamic indicator of relative performance against all other stocks given the latest closing prices.
Formula for determining RS Rank:
Weighted Price Change = (Price change this quarter * 40%)
+ (Price change 1 qtr ago * 20%)
+ (Price change 2 qtrs ago * 20%)
+ (Price change 3 qtrs ago * 20%)
When less than 4 quarters of data are available, 3 quarters are weighted 50%/30%/20%; 2 quarters are weighted 60%/40%; and one quarter or less is weighted 100% on the available data.
RS Rank as an Indicator of Strength
Stocks with high RS Rank, e.g. RS Rank=80, indicate the stock has outperformed 80% of all stocks over the previous 12 months. However, as this is a lagging indicator, it does not, by itself, reflect the technical condition of the stock at this moment in time. For example, a high RS Rank stock may be breaking down after its steady rise. The RS Rank will not reflect this break down until there has been sufficient price decline in the latest quarter to lower the ranking relative to all other stocks. Conversely, a lower RS stock, e.g. RS Rank=60, indicates the stock has outperformed only 60% of all stocks over the last year, but a steady increase in price in current periods will increase the RS Rank. An RS Rank>=70 is considered a non-laggard and is indicated in a green “OK” zone. An RS Rank<70 indicates lagging performance but because lower RS Rank stocks may be currently gaining strength relative to the market, RS Rank>=60 and <70 is indicated with a yellow “Caution” zone. RS Rank< 60 is indicated in a red “Avoid” zone on the chart.
The Up/Down Volume Ratio (U/D) is a ratio derived by dividing total volume on up days by the total volume on down days and then averaging these values over the preceding 50 days. A ratio greater than 1.0 implies positive demand for a stock.
U/D as an Indicator of Strength
While a stock is basing, an U/D ratio that stays above 1 is a sign of strength. Values greater than 1 are indicated in the green "OK" zone on the chart. Consider the pattern of the U/D ratio over time while the stock is basing. The U/D will often fall on the left side of the base, but as the stock shows attractive price behavior on the right side (high volume on up days), the U/D should rise, and should preferably stay >=1. If the U/D falls 50% or more in a week or if it hovers <0.7 for 11 wks or more, the stock is not healthy. An U/D ratio <1 and >=0.7 are indicated in the yellow "Caution" zone on the chart. An U/D ratio <0.7 is indicated in the red "Avoid" zone.
Because the ratio is averaged over the prior 50 days, this is considered a lagging indicator, so should be used in combination with other indicators and the stock's current price/volume action.