MarketSmith

Question 1

What is the Blue Dot screen?

Answer 1

On MarketSmith (IBD), a Blue Dot appears on the weekly chart when a stock’s RS line hits a new high while the stock is forming a base or breaking out, a bullish combination and a prime way to spot new market leaders.

“It’s the best list during a market correction,” said MarketSmith Senior Product Coach Scott St. Clair.

Question 2

What is RS on MarketSmith and how does it differ from RSI?

Answer 2

RS (relative strength) on MarketSmith compares the strength of the individual stock to the overall market, so an RS of 80 shows that it’s performing better than 80 (or 79) per cent of stocks. An ascending RS line shows that the stock’s degree of outperformance is growing.

RSI is a momentum oscillator that measures the speed and change of price movements and–simplifying here–
signals overbought when above 70 and oversold when below 30. RSI compares the stock’s movement to its past prices, not to the overall market.