RS Rating / RS Line System

Overview

The RS Rating system calculates a stock’s relative strength performance compared to the S&P 500 over the past 12 months, providing a 1-99 rating similar to IBD’s RS Rating. The RS Line visually displays the stock’s relative performance vs. the market.

Credit: © Fred6724, RaviYendru (initial script)

RS Rating (1-99 Scale)

How It Works

1. Performance Calculation: Calculates stock and SPX performance over 4 quarters (63, 126, 189, 252 days)
2. Weighted Average: Last quarter weighted 40%, others 20% each
3. Relative Score: Compares stock performance to SPX performance
4. Percentile Assignment: Maps score to 1-99 percentile using market-wide calibration

Rating Interpretation

• 90-99: Top 10% performers - strongest stocks
• 70-89: Top 30% performers - strong stocks
• 50-69: Average performers
• 30-49: Below average
• 1-29: Weakest performers

Calculation Formula

// Stock performance (weighted)
rs_stock = 0.4 * perfTicker63 + 0.2 * perfTicker126 + 
           0.2 * perfTicker189 + 0.2 * perfTicker252

// SPX performance (weighted)
rs_ref = 0.4 * perfComp63 + 0.2 * perfComp126 + 
         0.2 * perfComp189 + 0.2 * perfComp252

// Relative score
totalRsScore = rs_stock / rs_ref * 100

RS Line

Visual Display

• Position: Plotted below price (offset configurable)
• Color: Blue (customizable, default: color.rgb(0, 0, 255, 50))
• Calculation: close / comparativeSymbol * rsRatio
• Purpose: Visual representation of relative strength trend

RS Line Features

• Comparative Symbol: Default SP:SPX (customizable)
• Offset: Adjustable percentage to position line below price
• Timeframe Aware: Different offsets for daily vs weekly
• Industry Adjustment: Special offset for Investment Trusts/Mutual Funds

RS New Highs / New Lows

Blue Dots (RS New Highs)

• Types:
  • RS New Highs: Current RS making new high
  • RS New Highs Before Price: RS new high before price makes new high
  • Historical RS New Highs: All-time RS new highs
  • Historical RS New Highs Before Price: Historical RS new highs before price
• Lookback: Default 250 days (52 weeks on weekly charts)
• Purpose: Identifies relative strength leadership

Red Dots (RS New Lows)

• Types: Similar options for new lows
• Purpose: Identifies relative weakness

MA Overlays on RS Line

1st MA on RS Line

• Length: Default 21 (daily), 10 (weekly)
• Type: EMA or SMA (configurable)
• Color: Orange (default)
• Fill: Optional positive/negative area coloring

2nd MA on RS Line

• Length: Default 50 (daily), 21 (weekly)
• Type: EMA or SMA (configurable)
• Color: Red (default)

Percentile Calibration

Market-Wide Calibration

• Method: Uses request.seed() to access market-wide RS scores
• Source: seed_fred6725_rs_rating (RSRATING)
• Calibration Points: 7 levels corresponding to percentiles 98, 89, 69, 49, 29, 9, 1
• Auto-Update: Daily updates via GitHub workflow

Replay Mode

• Purpose: Fixed values for historical analysis
• Values: Pre-configured percentile thresholds
• Usage: When seed data unavailable

Configuration Options

RS Line Settings

• Hide Rating: Toggle RS Rating display
• Rating Only: Show only rating number
• Color: Customizable RS Line color
• Comparative Symbol: Default SP:SPX
• SpxValue: Approximate SPX value for scaling (default: 4200)
• Offset: Percentage offset below price (default: 80%)

RS New Highs/Lows

• Plot New Highs: Toggle blue dots
• Type: Choose display type
• Lookback: Days/weeks for calculation
• Size: Label size (Tiny/Small/Normal/Large)
• Color: Customizable dot colors

MA Settings

• Display MA 1/2: Toggle MA overlays
• Length: Daily and weekly lengths
• Type: SMA or EMA
• Color: Customizable
• Area Color: Positive/negative fill colors

Trading Applications

Stock Selection

• High RS Rating (80+): Focus on strongest relative strength stocks
• RS New Highs: Stocks making new RS highs often continue higher
• RS Line Trend: Rising RS Line = outperforming market

Entry Timing

• RS New High Before Price: Early signal of strength
• RS Line Above MA: Relative strength accelerating
• High RS + Structure: Best setups combine high RS with good structure

Risk Management

• RS Rating Declining: Reduce exposure
• RS New Lows: Exit signal
• RS Line Breakdown: Relative strength weakening

Best Practices

1. Focus on High RS: Only trade stocks with RS Rating > 70
2. Watch RS New Highs: Blue dots often precede price moves
3. RS Line Trend: Rising RS Line = favorable
4. Combine with Structure: High RS + pullback to structure = best setups
5. Monitor Declines: RS Rating drops = reduce exposure

Technical Details

Percentile Assignment

The system uses a complex percentile mapping function that:

• Takes the relative RS score
• Compares to market-wide calibration data
• Assigns percentile rating based on distribution curve
• Accounts for non-linear distribution of RS scores

Data Sources

• Stock Data: Daily close prices from current symbol
• SPX Data: Daily close prices from SP:SPX
• Market Calibration: request.seed(‘seed_fred6725_rs_rating’, ‘RSRATING’)

Related Documentation

• Main Dashboard Documentation
• 21 EMA Structure Indicator