Relative strength index
Used in technical analysis, it is a measure of the number of days a stock increases in value relative to the number of days it decreases in value. The rule of thumb is that values over 70 suggest overvaluation and hence selling where as values around 30 suggest undervaluation or buying. Of course, this indicator completely ignores all fundamental information about the firm's prospects and, hence, is problematic to use as a stand-alone indicator for an investment strategy.
Nearby TermsRelative purchasing power parity (RPPP) Relative strength Relative strength index Relative value Relative yield
Copyright © 2011 Campbell R. Harvey, Professor of Finance, Fuqua School of Business at Duke University