One of the predefined RRGs allows you to bring up a universe of growth, value and size indexes, and this can help you to spot how the various parts of the market are positioned against each other and how they are rotating.
Ths small RRG shows the tail of the Small Cap Value Index and how it rotated into the leading quadrant back in November, lost some relative momentum over the last five to six weeks and is now starting to move higher on the RS-Ratio scale again. This makes Small Cap Value the strongest segment of the US stock market at the moment - and the price chart is confirming that now with a break to new highs this week.
That itself is a strong sign already, but a look at the relative strength line against the Dow Jones US index reveals that this Small Cap Value segment is just turning around from a very prolonged relative downtrend. This can very well be a long-term turn around in the making.
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Julius de Kempenaer
Senior Technical Analyst, StockCharts.com
Creator, Relative Rotation Graphs
Founder, RRG Research
Host of: Sector Spotlight
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Feedback, comments or questions are welcome at Juliusdk@stockcharts.com. I cannot promise to respond to each and every message, but I will certainly read them and, where reasonably possible, use the feedback and comments or answer questions.
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RRG, Relative Rotation Graphs, JdK RS-Ratio, and JdK RS-Momentum are registered trademarks of RRG Research.
