A Relative Price Strength Screen for All Markets

The last week or two has been a tough market. And even though I remain positive, here’s a screen that doesn’t need a bull market to succeed. I’m going to go over a relative price strength screen that’s been beating the market in both good times and bad.

The last week or two has been a tough market. And even though I remain positive, here’s a screen that doesn’t need a bull market to succeed. I’m going to go over a relative price strength screen that’s been beating the market in both good times and bad.

The parameters to this screen are as follows:

· Zacks Rank <= 2
(Only buys and strong buys)

· Avg. Broker Rating = 1
(Since brokers are typically bullish “everything”, they have to be fully on board.)

· Relative Percent Price change over 12 weeks >= 15
(I’m looking for stocks that are outperforming the S&P 500 by 15 percent or greater over the last 12 weeks.)

· Percent Price Change over 12 weeks >= 5
(Simply beating the S&P is not enough. They also have to be up in price in absolute terms by 5 percent or more.)

· Current Price/52 Week High >= .80
(I’m looking for stocks that are trading at greater than or equal to 80 percent from its 52-Week High, i.e. no more than 20 percent from its 52-Week High. Only stocks high up in their uptrend are allowed.)

· Current Price >= 5
(They all have to be trading at a minimum of $5 or higher.)

The Results:

I ran a series of tests using a four-week holding period over the last five years. Each test was started on a different date to eliminate coincidental performance, and to verify robustness.

In the bear market of 2002, this strategy showed an average compounded gross return of 13.5 percent.

In the cakewalk of 2003, it showed a whopping 102.9 percent.

In 2004, the strategy showed an average compounded gross return of 48.9 percent.

In 2005, the returns were 64.6 percent.

And in 2006, the returns came in at 22.6 percent.

Here are three stocks that made it through this week’s screen (7/31/07):

Company

Ticker

Zacks Rank

Avg. Brkr. Rating

% Ch. Price 12 Wks. Rel. to S&P 500

% Ch. Price 12 Wks.

Curr. Price /
52 Wk. High

Current Price

DRUGS

Anika Therapeutics, Inc.

ANIK

2

1

54.39%

50.76%

0.98

$19.96

BUILDING PRODUCTS

MFRI, Inc.

MFRI

1

1

51.78%

48.21%

0.89

$27.70

BUSINESS SERVICE

PRG-Schultz Intl.

PRGX

1

1

32.95%

29.81%

0.90

$17.33




Learn how to find winning stocks in any market. Test this screen and others or build your own strategies and test them. It can all be done with the Research Wizard. Sign up for your free trial now at http://researchwiz.zacks.com

Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.

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