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.

For more relative strength insights and recent market posts, visit the homepage at The Relative Strength Trader

IRBT Surges, but Heavy Resistance Awaits

Above is a daily chart of IRBT, and as you can see, the stock has made a remarkably strong move over the past two weeks. In that short span, IRBT has surged from roughly $1.40 to $5.55, and it has done so on exceptionally heavy volume. Any time you see a multi-week run of this magnitude, especially from a beaten-down name, it grabs your attention. The strength is undeniable, but at the same time, it’s important to stay grounded and recognize where this move is taking place in the bigger picture.

As prices push higher, IRBT is now approaching a zone of heavy overhead resistance. When you look back at the chart from last fall, the $6 level stands out clearly as an important area. On multiple occasions, this zone acted as support, holding the stock up before ultimately breaking down. Then, in March, IRBT gapped below $6 and has remained under that price for the better part of nine months. Once a stock breaks down through major support and stays below it for an extended period, that former support almost always transitions into resistance.

We already saw this play out just two months ago. IRBT rallied up toward the $6 area, tested it, and failed almost immediately, turning back lower as sellers stepped in. Now, the stock is making another run at that same level, and the reaction here should be telling. What I’ll be watching closely is how volume behaves as IRBT pushes into this zone. If volume expands on the way into resistance, it could signal increasing interest or even accumulation. But it’s equally important to stay mindful of the significance of the $6 barrier. Until the stock can convincingly clear that level, caution remains warranted.

For more relative strength insights and recent market posts, visit the homepage at The Relative Strength Trader

Relative Weakness in Action: How BA Gave the Heads-Up

 

Today provides a clear and instructive example of relative weakness in action. Above, we have a 5-minute chart of Boeing (BA), and in the lower pane, SPY is displayed for comparison. From the opening bell, the market showed its usual volatility. During the first five minutes, BA initially moved higher, but shortly afterward, it began to sell off and then drifted sideways. Meanwhile, SPY was continuing to rally, pushing to new highs as illustrated by the white trendline.

This is where the concept of relative strength versus weakness becomes particularly valuable. When the broader market, represented here by SPY, is moving higher, most individual stocks are expected to follow suit. When a stock fails to confirm the market's move especially by putting in a lower high while the market is making a new high, it signals relative weakness. In today’s example, BA did not participate in SPY’s upward momentum. Instead, it formed a lower high, indicating that buyers were not as enthusiastic or aggressive in this stock compared to the broader market.

Relative weakness is a subtle yet powerful indicator. Traders and investors often overlook it, focusing solely on absolute price movement. However, by comparing a stock’s performance to a benchmark like SPY, one can anticipate potential downside before it fully unfolds. In this case, the lower high in BA served as an early warning that selling pressure was building and that a decline was likely imminent.

As the session progressed, BA’s weakness became more pronounced. Once support was breached and the stock broke below its intraday low, it accelerated downward. By the close, BA was essentially at the low of the day, demonstrating that the initial relative weakness was a reliable signal of what was to come. Observing this kind of pattern is invaluable because it allows traders to anticipate moves rather than react after they have occurred. Recognizing early signs of relative weakness can improve both timing and risk management, giving a trader an edge in positioning for potential declines.

Today’s chart is a textbook example of why relative weakness should never be ignored. Even when a stock moves slightly higher or drifts sideways while the market is making new highs, that lack of confirmation is meaningful. For traders who are vigilant, spotting a lower high in a stock while its benchmark is hitting new highs can serve as a signal to prepare for a sell-off. BA’s decline after the break of support perfectly illustrates how relative weakness provides an early heads-up that weakness is about to unfold, reinforcing the importance of monitoring relative performance alongside absolute price action.

TLRY Shows Powerful Relative Strength: A Bounce Right on Schedule

 

Today was a very interesting day for TLRY, and that’s why I want to give an important update on where things currently stand. On December 3rd, I wrote about how TLRY was approaching a support area and how there was a real chance for a bounce to develop from that zone. Well, that’s exactly what may be starting to happen. If you look at the daily chart above on the right, you’ll see that TLRY bounced precisely from the gap area I highlighted last week. As I mentioned in that earlier post, once we entered that gap, I’d be watching closely for any signs of a reversal and today, we definitely got one.

What makes this even more compelling is that the setup was visible before TLRY actually rallied. If you follow my work, you would have been prepared for the possibility of a move higher. Let’s shift our attention to the 15-minute chart on the left, along with MSOS in the lower pane for comparison. Notice what happened, MSOS made a lower low below Thursday’s low, but TLRY did not. Instead, TLRY printed a higher low, which I’ve marked with the white trendlines. This type of behavior is a textbook example of relative strength, and honestly, this is exactly the kind of setup I live for.

So when the market opened this morning and TLRY refused to follow MSOS to new lows, I was already on high alert. The moment resistance was taken out, I was ready to buy. Once TLRY moved above 7.35, that was the trigger to jump in, with a stop tucked safely below today’s low. From there, the stock didn’t look back. TLRY exploded higher and closed near the highs of the day, confirming the strength I was watching play out beneath the surface.

But now that we’ve enjoyed a powerful intraday move, it’s time to zoom back out to the daily chart. We’re not out of the woods just yet. There’s still a trendline overhead that TLRY needs to break through to confirm a more meaningful shift in momentum. On top of that, there’s an overhead gap between $9.00 and $10.30 that could act as resistance once we get closer. I’d especially like to see volume increase as price approaches that zone, that would give me more confidence that buyers are serious and that this isn’t just a one-day pop.

For now, this was a textbook display of relative strength, a clean trigger, and a powerful close. Let’s see how things unfold over the next few days.

VFF Breaks Down Into Gap as Momentum Fades

 

Above is a daily chart of VFF, and as you can see, price has now pushed into the open gap. The full range of that gap extends down to 2.96, so there’s still room for this to continue drifting lower if buyers don’t step in soon. What makes this move a bit disappointing is that just two weeks ago, VFF was the clear standout in the cannabis space. It was showing the strongest relative strength by far, and I had high hopes that we were setting up for a breakout over the 4.08 high. That breakout never came, and the chart has been fading ever since.

What really stands out now is the pattern of five consecutive days of lower highs. It’s very similar to the behavior we saw in MSOS back on November 20th. That same slow grind of lower highs often signals that momentum has shifted, at least temporarily, and that the stock needs more time before any meaningful upside can resume.

For me, this is now a patience trade. I’m watching for the prior day’s high to be taken out before considering a long entry. That would show me that buyers are finally willing to step back in and start exerting some control. Until that happens, there’s no reason to force anything. I’ll step aside, watch how much of this gap gets filled, and wait for price action to show its hand. Sometimes the best move is simply to stay patient.