Guide · Momentum
Does TSI Zero Line work?
Across 375 stocks, TSI Zero Line cut the worst fall on 82%, beat buying and holding on risk-adjusted return on 23% and on raw return on 18%. Mainly a seatbelt: it softened the big falls on most stocks, but usually gave up return to do it.
What it predicts
Blau's True Strength Index smooths daily price changes twice and divides by the smoothed size of those changes. Hold while it is above zero.
- TSI = 100 × the 13-day EMA of the 25-day EMA of daily price changes, divided by the same double average of their size. It runs from −100 to +100.
- In when TSI crosses above zero.
- Out when it crosses below zero.
Momentum plays bet that what has risen most over the past months tends to keep outperforming for a while. The family guide
How to use it
- It trades often (about 8 switches a year per stock), so costs, spreads and taxes eat into it more than the backtest's 0.05% per switch suggests.
- Expect to be wrong more often than right: only 29% of its calls worked. Its results come from the size of the winners, so following it means sitting through strings of small losses.
- It worked best on Real estate (37% beat holding on risk-adjusted return) and worst on Sectors (8%).
- Use it as one input. Your signal combines the plays you count with the other factors you weight into one call.
When it worked
TSI Zero Line did best against holding in the 2008 crash (+22% median gap) and worst in the 2020–21 rally (−28%). Median gap in return against holding the same stock (per year over stretches longer than 18 months; crypto excluded).
| 2008 crash | Recovery 2009–19 | COVID drop | 2020–21 rally | 2022 bear | Since Oct 2022 | |
|---|---|---|---|---|---|---|
| TSI Zero Line | +22% | −9% | +19% | −28% | +7% | −10% |
Where it worked
By kind of stock: how often it beat holding on risk-adjusted return, and the median Sharpe ratio gap.
| Group | Beat holding, risk-adjusted | Sharpe gap |
|---|---|---|
| Real estate | 37% | -0.06 |
| Industrials & rentals | 33% | -0.13 |
| Financials | 31% | -0.07 |
| Software & devices | 29% | -0.23 |
| Industrials & materials | 27% | -0.20 |
| Energy & power | 22% | -0.15 |
| Media & telecom | 20% | -0.10 |
| Metals & mining | 18% | -0.23 |
| Semiconductors | 17% | -0.15 |
| Big tech | 17% | -0.05 |
| Healthcare | 17% | -0.16 |
| Micro caps | 17% | -0.20 |
| Consumer & retail | 15% | -0.24 |
| Indexes & ETFs | 14% | -0.08 |
| Sectors | 8% | -0.18 |
Where it helped most
Sharpe ratio gap against holding, stocks with 3+ years of history
Right now
TSI Zero Line holds 148 of 377 names as of the Oct 13, 2026 close.
Changed its call in the last two weeks:
Backtest results since 2005 (or as long as each stock has traded), against holding the same stock over the same dates, after 0.05% per switch. Past results don't promise future ones. This analysis does not constitute trading advice. Please meet with an advisor or independently review sources before making any decision.