As investors, there’s no denying the power of an effective sector analysis. We use different tools to quantify relative strength and weakness of various industries, allowing us to better hone our stock selection process. While Fundamental and technical analysis are often the first tools mentioned when discussing sector analysis, relative rotation graphs (RRGs) represent yet another powerful visual tool designed to help analyze the relative strength and weakness of sectors.
A relative rotation graph is a tool that combines various sector performance metrics with a visual representation of relative strength and direction. By plotting popular ratio symbols, such as the relative strength index (RSI) and moving average convergence divergence (MACD), RRGs make it easier to quickly identify trends and relative performance of sectors in relation to one another.
For example, on an RRG, an uptrend reflects a particular sector’s strength compared to another. On the contrary, a downtrend illustrates a sector’s relative weakness compared to its peers. In addition to identifying relative strength quickly, the ability to further narrow down the list of potential sectors plays a key role in any strategy’s success.
When studying RRG data, it’s important to look for pockets of performance within each sector. For instance, if the energy sector is making an uptrend, energy subsectors, such as Oil & Gas and Electric Utilities, will also be making upswings, providing additional, more targe
As a supplement to more traditional forms of analysis, such as fundamental and technical analysis, the RRG should be considered as an important tool in any investor’s arsenal. Whether you’re looking to hone your sector rotation strategy, or simply identify various pockets of relative strength within the overall market, RRGs provide a great starting point for investors of all backgrounds. With their unprecedented visual representations and easy to navigate data, these graphs provide a powerful and convenient way to both identify and track key data related to sector performance. By combining various data sets, like RSI and MACD, RRGs make it easier to quickly identify ongoing trends and evaluate potential opportunities at a glance.
As investors, there’s no denying the power of an effective sector analysis. We use different tools to quantify relative strength and weakness of various industries, allowing us to better hone our stock selection process. While Fundamental and technical analysis are often the first tools mentioned when discussing sector analysis, relative rotation graphs (RRGs) represent yet another powerful visual tool designed to help analyze the relative strength and weakness of sectors.
A relative rotation graph is a tool that combines various sector performance metrics with a visual representation of relative strength and direction. By plotting popular ratio symbols, such as the relative strength index (RSI) and moving average convergence divergence (MACD), RRGs make it easier to quickly identify trends and relative performance of sectors in relation to one another.
For example, on an RRG, an uptrend reflects a particular sector’s strength compared to another. On the contrary, a downtrend illustrates a sector’s relative weakness compared to its peers. In addition to identifying relative strength quickly, the ability to further narrow down the list of potential sectors plays a key role in any strategy’s success.
When studying RRG data, it’s important to look for pockets of performance within each sector. For instance, if the energy sector is making an uptrend, energy subsectors, such as Oil & Gas and Electric Utilities, will also be making upswings, providing additional, more targe
As a supplement to more traditional forms of analysis, such as fundamental and technical analysis, the RRG should be considered as an important tool in any investor’s arsenal. Whether you’re looking to hone your sector rotation strategy, or simply identify various pockets of relative strength within the overall market, RRGs provide a great starting point for investors of all backgrounds. With their unprecedented visual representations and easy to navigate data, these graphs provide a powerful and convenient way to both identify and track key data related to sector performance. By combining various data sets, like RSI and MACD, RRGs make it easier to quickly identify ongoing trends and evaluate potential opportunities at a glance.
