VectorVest favors the purchase of stocks that are rising in price. This preference should not be confused with buying high-priced stocks. VectorVest prefers to buy stocks which are rising from a consolidation, and/or low-priced stocks with explosive price appreciation potential. On the other hand, VectorVest has no problem buying undervalued stocks making new highs. In any event, it believes that the stocks that are most likely to go up in price are those that are already going up.
To determine when a stock’s price is going up, VectorVest analyzes the direction of a stock’s price movements, the magnitude of its price changes, and the dynamics of these changes. This information is put into an indicator called Relative Timing, RT. On a scale of 0.00 to 2.00, a stock’s price is rising when Relative Timing is above 1.00, and falling when Relative Timing is below 1.00.
Relative Timing reacts to fact and is very intelligent. It can see things such as momentum changes that cannot be seen with the naked eye. It is the most important indicator to watch once you have purchased a stock. More information on how Relative Timing is determined is given in the chapter entitled: Timing, The Ultimate Weapon in Dr. DiLiddo’s book Stocks, Strategies and Common Sense.