MRS | Mansfield Relative Strength – 4CR CUP

by TraderCat, 13 Jan 2021

There are many investors referring to Relative Strength (RS) indicator published
by Investor’s Business Daily (IBD) for their analysis. Since the RS published by IBD is a
proprietary indicator, no exact formulation is published on it. Many discussion suggested
that the RS by IBD is modified from the Mansfield Relative Strength indicator.

There are 2 parameters for Mansfield Relative Strength setting, namely the market
index and the lookback period, n. the default setting of Mansfield Relative
Strength adopted by Stan Weinstein was “SPY” and “52” in weekly chart and “200”
in daily chart .

Stan Weinstein used the Mansfield Relative Strength indicator on weekly charts. He
suggested the breakouts out of a base had to go together with rising relative strength .
The Mansfield RS needs to be rising and close to or above 0.

This version of Mansfield Relative Strength relaxes these input parameters for your own
choice.

The market index can be set to market index, e.g. NDX, DJI, NI255, MOEX, TAIEX, HSI,
etc. and the lookback period is relaxed to integral input, e.g. 60, 90, 150, etc.

Mansfield Relative Strength

The Relative Strength indicator adopted by Stan Weinstein in his book: “Secrets For
Profiting in Bull and Bear Markets” is formulated as Mansfield Relative Strength (MRS).

The formula of this indicator is based on the regular Dorsey RS (DRS):

DRS = Price_stock / Price_index
MRS = 100 * ( DRS_today / sma (DRS, n) ) - 1 )

Where:
DRS = Dorsey Relative Strength
SMA = Simple moving average over n days.

The Mansfield Relative Strength formulates as the change of ratio of DRS to its own n-day
moving average, this means:
• MRS equals to 0 if the DRS is exactly equal to its n day moving average.
• MRS is negative if the DRS is below its n day moving average.
• MRS is positive if the DRS is above its n day moving average.
Using Mansfield Relative Strength

The MRS tells the relative price movement of the stock to the market index in a period of
time concern. As with the Dorsey RS, you can use Mansfield RS to examine if a stock
performs better than the market.

This indicator has the advantage over the Dorsey RS that the values are below or above
the 0 line. This allows us to screen for stocks with a MRS value above 0. When we see that
the MRS is far above 0 and has been above 0 for some time, we have found a stock that
outperforms the market heavily. We can buy this kinds of stock when dips occur.

If you like the indicator please follow, favorite, share, donate, like and leave a comment.
// This source code is subject to the terms of the Mozilla Public License 2.0 at
https://mozilla.org/MPL/2.0/

// © earnSmartAlgorithm

// @version=4

study(title = "Mansfield Relative Strength", shorttitle = "MRS", overlay = false)

sym = input(title = "Market Index", type = input.string, defval = "SPY")

RSlen = input(title = "RS Period", type = input.integer, defval = 260, minval = 1)

ovr = security(sym, timeframe.period, close, lookahead = barmerge.lookahead_on)

// Relative Strength

DRS = (close / ovr)

MRS = (DRS / sma(DRS, RSlen) - 1)

// plotting

colRed = #f43636

plot(MRS, title = "MRS", color = colRed, linewidth = 1, transp = 0)

hline(0, color = color.gray)