Normalized RS with Signal Line & Stats

## 📊 Normalized Relative Strength (RS) Oscillator with Signal Line & Stats

**Indicator Name:** Normalized RS with Signal Line & Stats
**Short Title:** NormRS w/ Signal & Stats
**(🔒 Invite-Only Script)**

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### 📜 Overview

This indicator measures the **relative strength** of the current security against a chosen benchmark (defaulting to SPY 📈) and presents this relationship as a **normalized oscillator**, bounded between 0 and 1. It is designed to help traders quickly identify periods of outperformance and underperformance, gauge the momentum of relative strength, and spot potential exhaustion points.

Think of it like an RSI or Stochastic oscillator, but instead of measuring internal price momentum, it measures how well the asset is performing *compared to the market* (or your chosen benchmark).

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### ⚙️ How it Works:

* A value of **1.0** means the current relative strength is at its absolute highest point within the lookback period. ⬆️
* A value of **0.0** means the current relative strength is at its absolute lowest point. ⬇️
* A value of **0.5** means the relative strength is exactly in the middle of its recent range. ↔️

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### 📊 Indicator Components

* **Normalized Value (Blue Line):** This is the primary oscillator line (0-1) representing the normalized relative strength.
* **Signal Line (Orange Line):** An Exponential Moving Average (EMA) of the Normalized Value line (default length 9). It acts as a smoother line to help identify changes in the momentum of relative strength via crossovers.
* **Upper Threshold (Red Dashed Line):** Fixed at 0.8. Readings above this level indicate extreme relative strength or potential "overbought" conditions relative to the benchmark.
* **Midline (Gray Dotted Line):** Fixed at 0.5. Values above 0.5 generally indicate the security is outperforming the benchmark relative to its recent history, while values below 0.5 suggest underperformance. Crossovers can signal shifts in the relative trend.
* **Lower Threshold (Green Dashed Line):** Fixed at 0.2. Readings below this level indicate extreme relative weakness or potential "oversold" conditions relative to the benchmark.
* **Statistics Table (Top-Right Corner S):** Displays the calculated "Avg. Days Above 0.8". This shows the average number of consecutive bars the Normalized Value has historically spent above the 0.8 threshold once it crosses over. It provides valuable context for how long periods of extreme outperformance typically last for the specific asset being viewed.

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### 💡 How to Interpret and Use

* **Trend Identification:**
* Blue line > 0.5: Suggests the security is outperforming the benchmark relative to its lookback period. 👍
* Blue line < 0.5: Suggests underperformance. 👎
* Crossovers of the 0.5 line can indicate potential changes in the relative trend.
* **Momentum Signals:**
* Blue line crossing **above** the Orange Signal Line: Indicates accelerating relative strength momentum. 🚀
* Blue line crossing **below** the Orange Signal Line: Indicates decelerating relative strength momentum. 🐌
* **Overbought/Oversold & Exhaustion:**
* Reaching levels near 0.8 or 0.2 suggests the relative performance trend might be overextended.
* Compare the current number of consecutive bars above 0.8 to the "Avg. Days Above 0.8" in the table. A significantly longer current streak might signal a higher probability of a pullback in relative performance. ⏳
* Look for **divergences**: e.g., if the security's price makes a new high but the Blue Line makes a lower high, it could indicate weakening relative strength despite the price move. 📉➡️📈
* **Strategy Building:** Can be used as a filter (only take long trades when > 0.5), for entry signals (crossovers of 0.2, 0.5, or signal line), or exit signals (crossing below 0.8, signal line, or divergences). 🛠️

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### 🔧 Customization

* **Benchmark Ticker:** Change from SPY to any other symbol (e.g., QQQ, IWM, BTCUSD, or a specific sector ETF) to measure relative strength against different benchmarks.
* **Normalization Lookback Period:** Adjust the sensitivity. A shorter period makes the indicator react faster but can be noisier. A longer period provides smoother signals but reacts more slowly.
* **Signal Line Length:** Adjust the smoothing of the signal line.

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### ⚠️ Disclaimer

This indicator is provided for informational and educational purposes only. It does not constitute financial advice. Trading involves substantial risk, and you should always conduct your own research and risk assessment before making any trading decisions. Past performance is not indicative of future results.

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### 🔑 Access Request (Invite-Only)

This script is available on an invite-only basis. To request access, please send a private message to the script author on TradingView. 📩