The idea behind this new script is to calculate the TMO for 3 different sources:
The stock itself
A market index symbol such as SPX or /NQ
The relative strength ratio of the stock divided by the index symbol
Then, by comparing the TMO output of each of these sources, we can identify points in time where the stock’s momentum first begins to outperform the overall market early on, while it’s still trading inside a base or pullback pattern.
The remarkable thing to me is that this strategy can be broadly profitable on most stocks just using the built-in divergence signals between the 3 TMOs, and no additional filters like MAs or other trend filters.
The other remarkable feature is that this seems to be a timeless source of edge: if many people start using these signals, it will likely create new divergences to take advantage of.
The set comes with a scan, column, 2 indicators, and a strategy for backtesting, and by default it compares the currently-charted stock to the SPX through the lens of the TMO.
This suite of tools is available for free to anyone who has previously purchased the Relative Strength indicator set, and from now on it will also be included for new customers as well.
Just a quick note to let you know the AutoFibs has been updated a bit to include the ability to switch between having 100% at the high or 100% at the low, and a couple of updates that allow the “rolling periods” mode to use either a higher timeframe or the chart’s own timeframe. See the AutoFibs here and prior customers can access the update from the My Account / Orders area of the site by clicking the green “View” button next to their order to bring up the latest links.
This week I released one of my new favorite studies, Relative Strength, which instead of plotting relative strength as a basic close line graph, it can plot it as a candle chart or a bar graph, so you can trade relative strength price action. It also includes a bunch of extra features that the normal line graph study doesn’t have, such as moving averages, 4 breakout/breakdown signals, 6 bullish and 6 bearish divergence signals over multiple periods, etc. Check it out here.
I’ve also posted some updates to both Big Levels and Premarket Range to add optional summary labels to each one. That way you can use them just to display information on your chart, without any lines, or you can use just the lines, or you can use both together.
As always, prior purchasers get upgraded for free, so just log back in to your My Account > Orders page, and click the green “View” order details button beside your old order. The new links should be there waiting.
Josiah is a stock & crypto trader, ThinkScript programmer, real estate investor, and budding mountaineer. He's also rumored to be an in-shower opera singer. Josiah started Easycators in 2015 and lives with his family in Nashville, TN. Twitter | YouTube
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