An e-mail recently crossed my desk wondering what parameters I liked to use with the Relative Strength Index (RSI, a canned indicator in most charting programs) to monitor a stock's relative strength. (Relative strength, of course, is one of the key concepts I discussed in the book.)

Caveat Investor! RSI is **not** the same as relative strength! "RSI" is an oscillator introduced by J. Welles Wilder and could be more appropriately called the internal strength index, for it compares the price of a security relative to itself. "Relative strength" compares the price of a security relative to the market.

These are two very different things! The RSI is a type of oscillator, which has little or no use in long-term portfolio construction/management, while relative strength measures trends of outperformance/underperformance and reversals therein and is (in my opinion, at least) an essential element of long-term portfolio construction/management.

-- Walter Deemer