To find stocks with Elite Relative Strength (RS), you need a systematic scanning process. True market leaders show their strength by making new highs before the major indexes (like the S&P 500 or Nasdaq) or by holding firm when the broader market is correcting.
Here is a step-by-step blueprint to find high-RS stocks using standard scanning tools (like MarketSurge, TradingView, or StockCharts):
1. The Raw Relative Strength Scan (The Baseline)
If you are using a platform that calculates a proprietary RS Rating (like IBD/MarketSurge, which ranks stocks from 1 to 99 based on price performance over the last year), your starting point is simple:
Filter for RS Rating $\ge$ 90: This immediately eliminates 90% of the market, leaving you only with the top 10% of performance.
Filter for RS Rating $\ge$ 95: Use this during a market correction to find the absolute elite tier.
2. Visual RS Scans (The "Line in the Sand")
If you don't have access to 1-99 ratings, you can use the RS Line (which plots the stock's price divided by the S&P 500 index price). Look for these specific visual behaviors:
RS New High Before Price
This is one of the most powerful leading indicators in technical analysis.
The Setup: The stock price is still consolidating or pulling back below its recent peak, but the RS Line has already broken out to a clear new lifetime or 52-week high.
What it means: Institutional accumulation is silently aggressive. Big money is absorbing every share available while the general market is distracted.
Blue Dot Scans (MarketSurge / Custom Scripts)
A "Blue Dot" occurs when a stock's RS line hits a new 52-week high while the stock itself is still in a base or consolidation pattern.
If you use TradingView or ThinkOrSwim, you can search for community scripts called "RS Line New High Before Price" or "IBD RS Blue Dot" to plot this automatically on your charts.
3. Market Correction Scans (The "Resilience" Test)
The absolute best time to find true RS is when the market index ($SPY or
$QQQ) is actively falling. When the tide goes out, you see who is swimming with a rocket booster.
Run a scan with these parameters during a market pullback:
Price: Stock is trading above its rising 8-week EMA (or 21-day EMA).
Index Comparison: The S&P 500 is trading below its 21-day or 50-day moving average.
Performance: Stock is within 10% of its 52-week highs, while the index is down 5% to 10%+ from its highs.
4. Combining RS with Volume Signatures
High RS on low volume can be a trap. To ensure the relative strength is backed by institutional footprint, layer your RS scans with volume filters:
RS > 90 + HV1 (Highest Volume in 1 Year) within the last 5-10 days.
RS > 90 + HVE (Highest Volume Ever) on a recent PEG (Power Earnings Gap).
A Quick Example Checklist:
If the market sells off 300 points, look for the stock that finishes the day positive or completely flat on above-average volume. Put that ticker at the top of your watchlist it is your primary candidate for an Inside Day contraction or an Under-Cut and Rally (U/C) setup the moment the market stabilizes.