⚠️ Personal research and trading journal — not investment advice. The author does not provide licensed advisory services.
Every article on this site filters stocks through one lens first: RS Rating ≥ 80. If you're new here, that filter probably needs explaining.
RS Rating — Relative Strength Rating — is a number that ranks a stock against every other stock in the market. A rating of 80 means the stock has outperformed 80% of the market over the past year. A rating of 95 means it has outperformed 95%.
The concept comes from William O'Neil's IBD (Investor's Business Daily) research. The intuition is simple: stocks that are already leading the market tend to keep leading it. The stocks that will produce the biggest moves in the next six months are usually already in the top 10–20% of performers right now.
How it's calculated
The standard RS Rating formula weights recent performance more heavily than older performance. The typical weighting is roughly:
- Past 3 months: ~40% weight
- Past 6 months: ~20% weight
- Past 9 months: ~20% weight
- Past 12 months: ~20% weight
The result is a percentile rank against the full universe. I recalculate this daily across the Thai SET+MAI universe (700+ stocks) and the US market.
The formula rewards recent momentum without completely ignoring the longer trend. A stock that just had one exceptional month doesn't immediately score a 95 — it needs sustained relative strength over most of the year.
Why it works — the evidence
The simplest test: take every RS≥80 stock that breaks out of a contracting base pattern. Compare their forward returns to a random sample of stocks on the same day. The RS filter adds a measurable, statistically real edge.
From my backtest across Thai stocks (1990–2026): combining RS≥80 with a Confirmed Uptrend market regime produces a mean forward R of +0.35 per trade (bootstrap CI excludes 0), compared to ungated performance that is near zero. This was validated in walk-forward testing across 6 rolling windows, with out-of-sample results all positive.
That +0.35R seems small. Compounded across a portfolio of 5 positions at 0.25% risk each, sized conservatively, it accumulates to meaningful returns over years. The edge is not dramatic per trade — it's consistent.
The US result is smaller (+0.12R per trade) but still real (bootstrap CI excludes 0). The Thai market has more alpha in this filter, likely because it is less efficient: institutional coverage of small and mid-caps is thinner, so leaders have more room to run before they're fully arbitraged.
The RS line — a second signal
Beyond the score itself, the RS line matters. The RS line is the stock's price divided by the benchmark index price, plotted over time. When the RS line is trending upward, the stock is consistently gaining ground against the index. When it's flat or falling, even if the stock is up, it's just riding the market.
The RS line rising (+1.09pp at 30 days, bootstrap CI excludes 0) is the first filter to survive walk-forward validation independently. A stock at RS≥80 with an RS line sloping upward is the foundation of every entry in the system.
What RS Rating does NOT tell you
RS Rating is a momentum filter, not a valuation filter. It tells you which stocks the market is rewarding right now. It doesn't tell you why, or whether the business deserves the price.
A high RS stock can still fail if: - The overall market enters a correction (market regime gate matters) - The breakout is from a low-quality base (pattern quality still requires human assessment) - There's a company-specific event (earnings miss, regulatory news, sector rotation)
This is why RS Rating is the first filter, not the only filter. Every article on this site builds on top of it — adding market regime gates, volume confirmation, and chart-pattern quality — to find the setups that actually have the highest probability of working.
RS Rating alone is a screen. RS Rating + uptrend regime + quality pattern + volume confirmation = a setup worth watching.
Track. Study. Wait. Strike.
Personal research and trading journal — not investment advice. The author does not provide licensed advisory services. — MOEasymmetry