RRG Charts

Is JNJ the pink elephant in the XLV room?

The Relative Rotation Graph above holds the constituents of the XLV (Health Care) ETF. In this post, I want to follow up on my previous article which pointed at the potential rotation from Financials into Health Care and take a look at the relative rotation of individual stocks that make up the sector, against XLV as the benchmark.

Over the past week, the relationship improved a little bit for Health Care, but it still is a somewhat "gutsy" view. Not yet a trend that is well underway, so beware.

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Tech stocks losing IT

From July to November of this year Tech stocks have dominated the performance of the Dow Jones Industrials Index ($INDU) but then came November!

The Relative Rotation Graph of all DJ Industrials stocks below shows the rotational pattern of all $INDU members with a three-week tail. 

The recent weakness for Technology and the subsequent takeover of sector rotation towards Financials is clearly visible on the RRG.

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What the ....happened in the week ending 11 November?

My last article on asset allocation was posted just before election day (11/8), and I was not happy about the rotation for equities against bonds...

What a difference a week makes.

The relative rotation graph above shows the rotation of various asset classes, represented by ETFs, over the past 13 weeks. The observations highlighted in the orange circles are those of the week ending 11 November. An unusually sharp turn reversed some major relative trends that were underway until then.

 

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Put some focus on the materials sector (XLB) but be aware of which stocks to avoid.

Last weeks RRG blog looked at the sector ETFs that make up the S&P 500 index. Materials, the XLB ETF, came out as one of the, more promising, sectors on its way to the leading quadrant.

In this post, I will look into the individual stocks that make up that materials sector.

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Very clear rotational picture in US sectors! Watching XLE, XLI and XLB for opportunities

The Relative Rotation Graph above shows the rotational picture for US sectors. For a change the rotations are well defined and clearly visible, which immediately raises the question; " For how long?"

I will try to answer the question, but no-one ever said it was easy.. ;)

Continue reading "Very clear rotational picture in US sectors! Watching XLE, XLI and XLB for opportunities" »

Financials are leading but they are not all equally good

After the dust has settled, it is time to assess what is going on under the hood.

The above Relative Rotation Graph holds the 30 Dow Jones Industrials components. As usual, they are fairly evenly spread out over the canvas of the RRG plot. 

From the RRG of the US sector ETFs (further down in this post), it is very clear that the Financial sector is leading at the moment. In this post, I want to dissect some of the individual financial components inside the Dow Jones Industrials index. Spoiler alert: They are not all equally good ....

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How to use Relative Rotation Graphs to monitor your portfolio.

As (many of) you may know my fellow commentator Arthur Hill lives in Belgium. That makes him, geographically, my closest StockCharts.com colleague.

On Tuesday 8 November, indeed election day, the Amsterdam chapter of the MTA (Market Technicians Association) had Katie Stockton of BTIG over as a guest speaker for a breakfast presentation. Katie is a highly respected technical analyst among institutional investors and an early adapter of Relative Rotation Graphs which are now fully embedded in her workflow.

Arthur made the trip over to Amsterdam to attend the breakfast session, which gave the two of us the opportunity to spend some time together working on blog articles in one of my favorite coffee places in Amsterdam.

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Bond market charts look horrible but they show positive rotation on RRG

The Relative Rotation Graph above shows the rotation of various asset classes against VBINX, a balanced index fund holding 60% in equities and 40% in bonds.

The current rotational picture is highlighting a pretty clear rotational picture for various (groups of) asset classes.

The most important observation is that all three fixed income related asset classes are showing a positive rotational picture while, at the same time, their price charts are showing horrible technical pictures. So what's the message that we can get from this?

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Energy stocks on the run, watch APA & APC

Quick scan

The Relative Rotation Graph above shows the rotation of the various members of the S&P Energy sector against XLE as a benchmark.

As usual, there are some good and some not so good names found on the plot. Inside the weakening quadrant, NFX and SWN are heading for the lagging quadrant. Already inside this lagging quadrant, we find OXY and COG showing less favorable tails, suggesting a further move into negative territory.

On the positive side, we find TSO and FTI, still inside the improving quadrant but, close to crossing over into leading.

Already inside leading, APA, NOV, and APC seem positioned for (further) outperformance of XLE in coming weeks.

Continue reading "Energy stocks on the run, watch APA & APC" »