Relative Rotation Graph (RRG) Charts with a unique benchmark

dreamtalk

In some instances when I want to know where securities are heading on an absolute level I found that picking $SPX or any other "real" index or stock is not very useful. I found that choosing $ONE as a benchmark gives a better view of the absolute direction of individual securities. Here is an example below (I unchecked $VIX on purpose, if you duplicate this list you can find out why I did it):

http:stockcharts.com/def/servlet/Favorites.CServlet?obj=1152526,19&cmd=show&disp=u//

What do you think?

dreamtalk

The link above doesn't seem to work:

http://stockcharts.com/def/servlet/Favorites.CServlet?obj=1152526,19&cmd=show&disp=u

dreamtalk

No it works but $ONE is replaced with $SPX. So replace $SPX with $ONE as benchmark.

Julius_RRG

Hi dreamtalk,

I could not get your link up and running but I can imagine what you are looking at. I often do something similar, especially when looking at asset classes, but instead of using a flat index like $ONE I use some sort of cash index, something that never goes down and gradually rises corresponding to some sort of yield, LIBOR, EONIA etc.

What that does is make your RRG more or less a risk on / off tool and monitor a universe from an absolute performance point of view. It is actually still relative but the benchmark never goes down so therefore it becomes absolute

You will notice that the distribution of the securities over the canvas of the RRG will be very concentrated depending on the direction of the general market.

Jdk