Don't Ignore This Chart!

XLC recovering on Relative Rotation Graph, but for how long?

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On the daily Relative Rotation Graph above, the new XLC sector is positioned inside the improving quadrant. XLC moved into the improving from lagging 5 trading days ago and is now heading higher on both scales at a positive RRG-Heading.


Measured on the JdK RS-Ratio scale (horizontal axis), XLC is still one of the weaker sectors in the S&P universe with only XLRE and XLU at lower RS-Ratio levels. The big difference is that XLRE and XLU are heading South-West while XLC is heading North-East.

Combining this view of RRG with the weekly version (below) makes clear that there is a good chance that the current positive rotation on the daily RRG will have a hard time completing a rotation into the leading quadrant.

The distance from the 100-level on the RS-Ratio scale is big enough to roll over and complete the rotation through improving and then back to lagging, thus confirming the weak position on the weekly RRG.

 

All in all the current relative improvement for the new Communications Services sector seems to be a recovery within a longer term relative downtrend.


Let me know what you think of this usage of RRG in the comments below. If you would like to receive a notification when a new RRG blog article is published, simply "Subscribe" with your email address.

 

Julius de Kempenaer | RRG Research
RRG, Relative Rotation Graphs, JdK RS-Ratio, and JdK RS-Momentum are registered TradeMarks ®; of RRG Research

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Julius de Kempenaer
About the author: is the creator of Relative Rotation Graphs™. This unique method to visualize relative strength within a universe of securities was first launched on Bloomberg professional services terminals in January of 2011 and was released on StockCharts.com in July of 2014. After graduating from the Dutch Royal Military Academy, Julius served in the Dutch Air Force in multiple officer ranks. He retired from the military as a captain in 1990 to enter the financial industry as a portfolio manager for Equity & Law (now part of AXA Investment Managers). Learn More
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