A relative strength reading of 90 or greater is one of the quantitative screens used to generate the SmallCap Foolish 8 Growth Stock Ideas list each month. However, every stock experiences relative price weakness once and a while, too. These periods represent potential buying opportunities for the long-term investor, as relative weakness means a lower bar for achieving high future returns. Every month, The Motley Fool publishes a small-cap stock idea list using a quantitative screening process called the Foolish 8. And every month, the list of stocks generated by the Foolish 8 system changes.
Some stocks appear on one month's list and fall off the next.
A few have even followed the cycle of appearing on the list one month, falling off the next, and then reappearing a few months later. There is no rhyme or reason to the list. The only guarantee is a new collection of small-cap investment ideas each month. The most common reason that stocks fall off the Foolish 8 list from month to month is due to the screen that requires a relative strength rating of 90 or higher. We've discussed the purpose of the relative strength screen in this space before, as well as each of the other Foolish 8 screening steps in detail.