RRG charts- weekly and daily differs vastly.

skgwius

The question is to whether use daily RRG charts for trading or weekly RRG chart? Which is a better indicator?

lmkwin

They tell you two different things. What is better depends on your investing personality. I work from long to short term in order to make decisions, so I look at monthly, then weekly, then daily for decisions. Of course, I use Point and Figure charts to actually assist me, but I'm more of a find the intermediate/longer message on a chart type.

It all depends on what chart speaks to you and your style I suppose.

skgwius

i agree and i also consider forward looking indicators. it was just a question to clarify and figure out why daily RRG recommends different stocks than that of weekly. thanks

bellruss

Using a daily RRG chart for short term analysis, for example 10 days or less, is useless. In this case, recent daily data displayed on an RRG Chart will not necessarily agree with the most recent data displayed on a daily Sharpchart. This is because there is apparently a relatively long-period moving average applied in the RRG algorithm which is much longer than 10 days (for example). So, the RRG JK RS-ratio algorithm needs to be modified to take into account the time period selected by the user for the RRG plot, so that for short time periods, say 10-days or less in this example, a shorter moving average (less than a 10-day period) will be applied in the JK RS-ratio algorithm. Bottom line - a long period moving average is apparently used for all the RRG charts plots regardless of the time frame selected for the RRG plot by the user. This causes the display of the most recent daily data on the RRG plot to completely disagree with the price data displayed on a daily Sharpchart. The RRG algorithm needs to be able to account for (i.e., adjust for) the time period selected by the user for display of the RRG chart.

Kinsale

I'm confused by the weekly/daily RRG disparity too. If I choose a 30 period daily RRG, the resuilt looks very different from the 6 periood weekly RRG – shouldn't they be the same?

markd

@Kinsale

I don't know the formulas for RRG, but, a daily plot likely uses daily data and a weekly plot weekly data - so, for 30 days it would use 30 data points - while 6 weeks will use only 6 data points. Different numbers, different results. Also, weekly data is final only at the end of the week, so all data for six full weeks is from Fridays (normally). In other words, a full week is always Monday to Friday (excluding holidays), so if a week is not yet complete, (e.g. on Wednesday) you still get a plot but its not 30 days. Thirty days, on the other hand, is always 30 days.

So, when calculating the difference between the starting and ending prices, the start price for a weekly RRG will always be the Friday of the first week. But the start price for the 30 days might be the Monday, Tuesday or any other day of the week.

lmkwin

In the below link, @Julius_RRG discusses this topic at about the 12:20 mark.

https://stockcharts.com/articles/rrg/2020/05/sector-spotlight-seasonality-a-964.html

@Julius_RRG is also a member of this forum and he sometimes answers questions here.

Andrew

Kinsale

Thanks @markd and @imkwin – both are very helpful!