I always pay attention to relative strength, but perhaps the most important time to follow it is as earnings approach. If a stock is downtrending relative to its peers and its peers are not performing well, Wall Street is telling us something. Expectations are quite low and I wouldn't be surprised by anything. In my experience, you really
want to guard against a potential negative market reaction after earnings are released. As an example, let's take Thor Industries (THO), which will report on Wednesday morning. Based on this chart, I would not be looking for a positive surprise:
