How to Interpret the RS Phases and Divergences Indicator
The RS Phases and Divergences indicator is a way to identify periods of Relative Strength. This indicator was created in colloboration with Deepvue Founder Joe Carvalho.
It highlights when a Stocks Relative Strength Line is diverging from a chosen index, by default the SPY.
When the RS Line is increasing as the SPY is declining, the indicator will highlight this with a blue background. When the RS line is declining as the SPY is increasing, the indicator will highlight this with a red background. It will also highlight these areas if the slopes of the RS and SPY are considerably different.
The columns highlight the strength of the divergence and a more day to day expression of RS.
This indicator is particularly helpful for analyzing stocks during corrections and finding stocks that are resisting the market decline.
Examples
Here you can see and example of the indicator on a weekly chart with TSLA in 2020. The indicator highlights the subtle RS as the RS line declines at a shallower slope than the market
This preceded TSLA’s model book move after the 2020 correction
GEV showed a positive RS Phase during it’s base amid the market correction
In 2022 and 2023 ELF showed numerous RS phases before making it’s model book move
in 2024 ELF showed a negative RS phase before breaking down and dropping nearly 50%
