[isatrader]

OK, this leads to another question, and just so that I'm clear..
I've attached the RS chart against S&P and against its overall market, FTSE
The link about its calculation uses a simple average whereas the mansfield chart uses a weighted according to the book.
I've attached the same simple and weighted, red and blue respectively
The RS zero (compared with the FTSE, bottom half window) is now flat on the weighted and above zero

Your chart in your reply uses the RS against the S&P and now both the weighted and simple are declining and below zero (only just..possibly at zero with weighted). top half chart window above

If the S&P is in stage 2, and the FTSE in stage 3, then the RS is going to be different. I respect the fact that they are correlated, and the S&P will often drag the FTSE with it but should we be comparing RS with the S&P all the time, or was this just an oversight?

I'm assuming that you are referring to point 3 on page 25 where he talks about the Mansfield Charts? This refers to the MA on the price on the charts in the book and not the relative performance MA which we are discussing, as the Mansfield charting service that he used for the books examples had a 30 week weighted MA on the weekly price bars, but his preference is for a 30 week simple MA and is what is used these days on the Global Trend Alert charts.

So back to what MA should be used to calculate the zero line on the relative performance indicator. A 52 week simple MA should be used according to the calculation I got from chartmill's documentation, and is what I've used for all charts on the forum and is very effective.

The second part of your question was about what market to compare against. You can compare against any market you choose to, but I favour the S&P 500 because it's the main US market and the benchmark that most like to compare against including Weinstein. I believe when the book was made that the Mansfield Relative Strength was compared against the Dow 30 at the time, but these days the S&P 500 is favoured as the benchmark.

The other reason I use the S&P 500 to compare against is that I needed a universal reading so that I could instantly compare the strength of any stock, commodities, index etc to each other as I cover stocks from all over the world on here and create the relative performance tables and so a universal benchmark is necessary for consistency and help with any confusion. As if you only compare to your local market then you can't gauge the relative strength versus other markets without additional work.

The other reason is that I think we should all speak the same language on here, as after thousands of charts examples using the S&P 500 as the benchmark, I've found that when a stock breaks out into Stage 2A, the RS generally crosses over or is already above the zero line (relative performance 52 week MA versus the S&P 500). So I'd recommend using the S&P 500 as the benchmark because of that and the universal readings to compare against all the other charts on here, but if you do choose to use a local benchmark like the FTSE100, then just be clear when you are talking about it in your posts, so that there's not any confusion for any of the members that don't realise that's it's comparing to a different index to all the other charts on here.

I hope that makes sense.

Cheers