Updated: Mar 4
What is hot and what is not -TPA-RRG captures the inevitable movement of stocks into and out of favor.
Scores and ranking - Clients can quickly see which stocks are showing the best and worst relative strength characteristics. TPA found that using RRG’s was very beneficial, but cumbersome, so we simplified the process by creating a score for each stock and sector.
The best of both worlds – RRG & TPA
Now, clients can use TPA-RRG scores and rankings to identify stocks that are not only moving into favor, but are also technically positive.
TPA-RRG analyzes every stock in the Russell 1000 and 25 major sector & subsector ETFs
Find more in-depth explanations and links to instructional videos below.
Below is the Relative Rotation Graph for TPA-RRG’s Top 20 & Bottom 20. You can use the following link to see how these stocks have changed over time: https://vimeo.com/683431242
The top sectors in terms of relative strength and momentum seem to be associated with Russia-Ukraine
· Aerospace-Defense stocks have the best score. Of course, these stocks would benefit from conflict.
· Materials stocks are driven by shortages and commodity prices. These are exacerbated by Russia and Covid.
· Healthcare stocks stay strong because of Covid
· Energy has weakened even as Crude rallies. Watch out for these stocks if the conflict is resolved and Crude falls.
· Some TECH-related ETFs are weak, but improving as they became very oversold: SOCL, XLC, TAN, IGV have all moved toward the Improving quadrant. HACK (Cyber security was oversold, but also moved higher with the threat of Cyber attacks)
Top 20 & Bottom 20:
Financial stocks dominate the TOP 20, while TECH and Discretionary stocks are prevalent in the Bottom 20. The stocks that are in the TOP and Bottom 20 deserve to be there. Top stocks have good relative strength and momentum and are technically strong, while Bottom stocks have weak relative strength and momentum and are technically vulnerable.
Clients should be wary of reversals that could come with the lessening of conflict as many sectors became very oversold or very overbought.
Below is the Relative Rotation Graph for 25 Major ETFs.
You can use the following link to see how these stocks have changed over time: https://vimeo.com/683431242
What are RRG’s?
Julius de Kempenaer developed Relative Rotational Graphs (RRG) in 2004 and thousands of investors use RRG’s. “Relative Rotation Graphs, commonly referred to as RRGs, are a unique visualization tool for relative strength analysis. Chartists can use RRGs to analyze the relative strength trends of several securities against a common benchmark, and against each other. The real power of this tool is its ability to plot relative performance on one graph and show true rotation. We have all heard of sector and asset class rotation, but it is hard to visualize this “rotation” sequence on linear charts. RRGs use four quadrants to define the four phases of a relative trend. True rotations can be seen as securities move from one quadrant to the other over time.” - Stockcharts
What are TPA-RRG scores?
TPA recognizes the power of RRG’s to highlight stocks and sectors moving in and out of favor, but also notes the shortcoming of having to examine many RRG’s to decide where to invest. TPA has developed TPA-RRG Scores to be able to rank stocks and sectors in terms of relative strength. TPA-RRG scores are constructed to focus on stocks and sectors as they move from negative to positive and positive to negative. Scoring also allows ranking so investors can focus on the best and worst areas of the market.
How investors can use TPA-RRG
1. The Sector analysis lets clients focus on the best and avoid the worst areas of the market
2. TPA-RRG ranks the entire Russell 1000 and provides the Top 20 and Bottom 20 stocks so investors can see the best and worst stocks to make sure they are taking advantage of opportunities and not getting into trouble.
3. We also look at the top and bottom stocks through a standard technical analysis to avoid stocks that are overbought, oversold or at other technical trouble spots.
You can learn more about RRG’s with these links:
Included in the Weekly TPA-RRG Report
1. The weekly TPA RRG Report will provide RRG Scores, Rankings, RRG’s and a RRG Video for:
· 25 Major Sector and Subsector ETFs
· Top 20 & Bottom 20 stocks in the Russell 1000 - based on TPA’s RRG and Trend-Range analysis
2. Finally, TPA will provide a weekly commentary on TPA-RRG Scores and Rankings
3. Custom TPA-RRG Reports which focus on client specific stocks or sectors are also available. Contact TPA for details.
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