RRG charts

migjdm

I have read and reviewed almost everything on the sight about RRG. But I am still having trouble getting through my thick head. I understand that price still drives decision fr me but where seems to be the sweet spot that is best to pay attention to for new ideas?

http://stockcharts.com/def/servlet/Favorites.CServlet?obj=1588364,187&cmd=show&disp=u


On the above chart which draws your interest the most? PSCH or IHI

markd

Sorry, I can't get in via that link. It reports my login closed due to inactivity, which isn't true. Can you post a graphic instead?

migjdm

Attached is the RRG file

markd

Would it be clearer if the benchmark were XLV, or another whole sector ETF, instead of $SPX?

It seems you've decided you want something in Health Care, so wouldn't the broadest measure of that sector be the benchmark? I think you would want to see if you should take the whole sector or an industry within that sector - devices, providers, services.

I don't quite get RRG either - too used to charts, I guess.

I'm not sure I like either of the charts you've selected because they show some pretty tall volume bars on down days. --But -- I haven't decided whether technical analysis - at least the volume side of technical analysis - really applies to ETFs - since the price is really not derived from supply and demand for the ETF but the value of the underlying stocks.

Julius_RRG

Hi @migjdm you may want to have a look at the reply I just posted in another thread here on SCAN.
Hope that clarifies at least a bit. Just hit me up if still confused, maybe best in the DISQUS threads below blog posts as I have noticed it is hard to keep up with all that goes on on SCAN and I have still to find a way to get noticed when something RRG related gets posted here. Happy to reply or explain here as well (when I see it that is )

migjdm

DISQUS threads??

Julius_RRG

Below every blog post you have an opportunity to leave a comment in DISQUS, I am trying to keep up with those and answer them before the discussion is closed ( 7 days after the blog is posted I believe)

migjdm

Julius_RRG - What does the tail length and width tell us?

Julius_RRG

Hi migjdm

The tail(s) of the various securities on a Relative Rotation Graph get thicker as they move further away from the benchmark (center of the chart) and get thinner as they close in. The rationale behind this is the fact that the further away from the benchmark, the stronger the (relative) trend is and therefore the most potential alpha to be captured.

See the ChartSchool article here

The trail length can be used as an indication of the power behind a move. A long trail indicates a strong move while a short trail suggests less power. We are currently researching the behavior of trails during turns and it looks as if the odds for a trail turning are higher when a trail is short (ie the intervals between observations are short) while a long(er) trail seems to suggest a continuation in the same direction

If you use this site-search on StockCharts.com you will find all blog posts where I talk about trail length, some of these will also have some further explanation.

Hope this helps,
Julius

migjdm

Thank you it does

migjdm

In stockcharts.com can Jdk Rs-Ratio & Jdk Rs-Momentum be screened for? I don't see those in the screen components.

Julius_RRG

Hi migjdm.

Unfortunately the scan engine does not support the RRG indicators (yet)

migjdm

One last question (at least for now) I've read but can't find right now - What is the significance of the closeness of dots on the tail? Closeness vs further apart?

Julius_RRG

The distance between the observations on the tail can be used as a volatility gauge and/or a power meter. The further apart the bigger the move over that period. What we have recently started to study is the odds for a tail to (start) turning when observations are getting closer together. When the observations are wide apart (powerful move underway) then the odds for that tail to turn seem a lot lower than when the observations are close together ...

migjdm

Thanks for all of your responses - I love using RRG on stockcharts.com - RRG gives me such a great way to find ideas now or potential. Hope the Jdk Rs-Ratio & Jdk Rs-Momentum be will be able to be screened for soon. Looking forward to the next research. By the way I am a retail advisory managing clients assets tactically

migjdm

Julius_RRG - Another question - When comparing 2 potential longs in the leading box would u like the one in the leading box for 6-7 weeks or similar postion just crossing over to leading but with much the same angle? (Don't know if link will work) CQQQ or EMQQ (not asking for recommendation just like your thoughts)
https://stockcharts.com/def/servlet/Favorites.CServlet?obj=1588364,189&cmd=show&disp=u

Julius_RRG

No problem,

I have re-created an RRG with those two ETFs
https://stockcharts.com/freecharts/rrg/?s=CQQQ,EMQQ&b=SPY&p=w&y=1&t=10&r=98.61,113.21,93.51,108.03&f=tail,d

Both are very strong and at high JdK RS-Ratio levels, indicating strong relative uptrends against SPY.

In this particular setup I would prefer EMQQ as it just went through a corrective rotation; Leading, Weakening, and now back into leading which we have found to be a strong sign.

It also means that EMQQ seems to have more upside space to move higher (relative) while CQQQ has already moved ahead compared to EMQQ.

migjdm

Thank you again - I believe the RRG charts are amazing and I am trying to learn all I can. Looking forwarding to seeing any new data/research.

migjdm

@Julius_RRG - I think I've asked before but can't find - If looking at RRG of securities whhich should be leading for a strong rotation should we look for Jdk Rs-Momentum as leading Jdk Rs-Ratio?

https://stockcharts.com/h-sc/ui?s=TAN&id=p72921403104&a=532648657&listNum=86&cn=18&insp=1