RRG: Tool To Track Investments And Identify Opportunities
Chartist Karan Bhojwani explains meticulously how Relative Rotation Graphs not only help investors protect and book profits at the right time but also help identify in advance which stocks and sectors may do well
The stock market is a place where there are large number of stocks to choose from for trading or investment purpose. Also, there are numbers of sectors to choose from. Hence, the stock market becomes a jigsaw puzzle for traders or investors as they fail to draw the conclusion which sector or stocks are best for investment or trading purpose out of the huge universe of the sectors. Historically, we have seen that a particular sector may perform well during a particular period and it may be a leader, but the same sector may be a laggard in a next investment cycle. The latest example which comes to mind when we talk about leaders turning laggards is the pharmaceuticals sector. Since the year 2011, the pharmaceutical sector had saw a bull run and it outperformed the market hands down.however, since the second half of the year 2015, things turned gloomy with issues of regulators and inspections hurting the sector and, as a consequence, turning this sector a laggard. So as an investor or trader, it is important to understand when to rotate in or out of a particular sector, because in investing or trading it is important to be with the trend, since if you go against the trend you’ll blow your account. So, now comes the critical question: how do you know when to rotate in or out of a particular sector? To help our readers understand the most crucial piece of the puzzle, we have penned down a special report which will give you an idea when to rotate into or out of a particular sector.
Traditionally, the concept of relative strength has been one of the most popular ways of determining which sectors are worth watching. Basically, the relative strength is calculated by taking the ratio of one security’s price over another. We need to point out that this should not be mistaken with Rsi—relative Strength Index. RSI is a single security indicator which measures strength of that security against itself,whereas, RS— Relative Strength is used to measure the strength of two securities or Indices against each other. It compares two indices or two securities and, therefore, it is also known as “Comparative” Relative Strength. Another tool that investors