The price relative can be used to show relative strength or relative weakness. While the S&P 500 moved to new lows in March, Broadcom (BRCM) held support around 16 from mid January to early March. As a result of relative strength, the price relative (BRCM:$SPX ratio) surged higher in February and March. Relative strength preceded absolute strength as BRCM surged from 16 to 24. Note: This is an educational post featuring a technical analysis technique.
by Arthur Hill
