Spotting Winners: CTSH Shows What True Relative Strength Looks Like

 

CTSH: A Clear Lesson in Relative Strength

When analyzing market behavior, few concepts are as valuable or as consistently reliable as relative strength. Above is a daily chart of CTSH, and it provides a textbook example of how powerful this concept can be. Unlike many technical indicators that change their signals depending on the timeframe you’re viewing, relative strength delivers the same message across the board. Whether you’re looking at a 60-minute chart or a daily chart, the stock is either outperforming the market or it isn’t. That uniformity builds confidence, and confidence is crucial when making trading decisions.

Why Relative Strength Matters More Than Indicators

Most technical indicators are derived from price, yet they often contradict themselves depending on the timeframe. A stock might look bullish on the hourly chart but overbought on the daily. Signals can conflict, cross, or cancel each other out. This inconsistency makes it difficult to trust what you're seeing. Relative strength, however, strips away the noise.

At its core, relative strength shows how a stock behaves compared to the broader market or a benchmark, such as the S&P 500 ETF (SPY). If the market is pulling back but your stock is not only holding firm but making higher lows, that is a tremendous clue that buyers are quietly stepping in. It’s one of the purest forms of price analysis, and CTSH is a perfect example of why it works.

CTSH vs. SPY: A Powerful Comparison

In the lower pane of the above chart is SPY, placed there for direct comparison. Notice what happens during the most recent pullback. SPY made a clear lower low, highlighted with the white trendline. The broader market was weakening. Sellers were in control. Yet CTSH did the exact opposite, it made a significantly higher low during the same period.

That type of divergence is not random. It is a strong sign of accumulation. Institutions often build positions quietly during market dips, supporting a stock even when the rest of the market is retreating. CTSH held firm, showing impressive resilience when it mattered most.

Early Breakout Signals the Strength Behind the Move

Once SPY finally began to turn higher, CTSH wasted no time. While the market was simply recovering, CTSH was already breaking out to a new swing high. That breakout would have been a fantastic entry opportunity for anyone watching relative strength. The fact that CTSH was outperforming before the market turned gave traders a leading indicator, not a lagging one.

And the follow-through confirms the validity of the signal. Since that breakout, CTSH has continued to climb aggressively, rewarding traders who recognized the early strength and acted accordingly.

A Simple but Effective Trading Lesson

The beauty of this setup is its simplicity. No complicated indicators, no confusing overlays, just pure observation and an understanding of how strong stocks behave during weak markets. CTSH showed relative strength when the market faltered, and once the market recovered, the stock launched higher.

It’s a powerful reminder that sometimes the best trades come from simply knowing what to look for.