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using price-relative to SPY for a trade exit signal on weekly charts

Has anyone had experience using price-relative to SPY to decide when to exit an intermediate term trade on a weekly chart. I have been using a weekly price-relative to SPY chart with a 2 and 4 week sma placed behind price and price opacity set to 0. It has given me some decent exit signals when the 2 wk. sma of price-relative crosses below the 4 wk sma of price-relative on intermediate term trades with weekly charts. The trend for Spy must be up or flat, not down. Basically you are exiting a trade when it starts to underperform SPY. To achieve price relative one uses the indicator "price" with parameters of trade:SPY
I have been using the above for a few months. I just trade on an intermediate term basis with weekly, not daily, charts. I am wondering if any SCAN members have had any experience with this over a longer periods than a few months. I would also appreciate any constructive criticism on using this technique to exit intermediate term trades( 4 wks to 52 weeks).


  • The approach makes perfect sense to me. You are combining absolute and relative analysis which is a smart thing to do anyway. Using relative performance as a filter to exit trades is one of the things you can use RRG charts for. Make a list of the tickers in open trades and monitor them in a Relative Rotation Graph against SPY. As you mention 2-4 weeks MAs on a weekly chart you probably need to use daily RRGs to monitor the relative movement. As soon as they start to drop into the weakening quadrant they should be watched more closely. A move into lagging will be an exit signal from a relative point of view.
  • I have a couple of comments to make. This type of analysis is an important dimension in investing and trading. I watch Price Rel crossing a MA, not MA crossing MA because MAs are lagging. Also, dropping some indicators helps too. I only use SPY for ETFs and $SPX for non-ETFs. That is a good observation: to make sure $SPX is trending up. We all know that $SPX is the go to benchmark. The Weekly view is the long period for me. As far as time horizon, small pullbacks seem to occur every 1.5, two, or three months. The $SPX primary trend has been up for the last 5 years.

    That is good to know that RRG charts can provide some type of signal from a relative perspective if it is on the verge of moving into a different quadrant. (I guess this didn't sink in yet.)
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