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Relative Rotational Graphs


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Interesting proxy Bond yield chart here on a RRG using  ETF's to demonstrate the  2 - 10 yield curve flattening over the 5 week period may give a clue to near future bond markets. (see article link)

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https://www.stockcharts.com/articles/dont_ignore_this_chart/2018/10/is-the-bond-market-sending-us-a-message.html?utm_source=dlvr.it&utm_medium=twitter

For anyone not familiar with Kempenaer's graphs here is a link to a tutorial page. https://www.stockcharts.com/docs/doku.php?id=other-tools:rrg-charts

Also here is a 5 week period RRG of US indices with Dow moving from improving zone to leading while S&P composite moves from lagging to improving and Nasdaq stuck firmly in weakening.

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Although I personally can't comment on the bond stuff, I wanted to weigh in on the RRG. I've seen it a few times on Bloomberg (and also on IG actually a few times on the IGTV) and I think they're great! Fantastic way to visually represent movements .

the below video is ok, but it doesn't really get started until about 2.20. Whilst this is only an 'ok' video in it's entirety, whilst I like is at 4.00 he slides the chart and you can see how things are turning cyclically and rotating (hence the name!)

for those who have the time there is this video. Haven't watched it be seems to be a deep dive.

https://www.youtube.com/watch?v=7OM9lTyLIvg

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Guest PandaFace

I’ve seen these before on igtv videos. Think they’re pretty good visually but would be interested to see how they create trade ideas over just giving and understanding of where the markets have been. 

Is there anyway to try this stuff out? 

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@PandaFace I should have included the link for the US indices RRG which is always on display and updated. Also has a slider and an animate button which goes back up to 30 weeks though the zones don't readjust for size and shape as they do in real time.

Noticed that the Nasdaq is just leaving the weakening zone and moving into lagging.

https://www.stockcharts.com/freecharts/rrg/

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  • 6 months later...

Hi folks, you may have seen the 'announcement' on Community, but at 10:30 today we'll have Julius de Kempenear, founder of Relative Rotation Graphs (RRGs) discussing GBP and how it is trading among its peers, as well as the future prospects of the FTSE 100. We'll be discussing the sectors on the move and how RRG’s try to identify a trend.

Do you have any questions?! Submit them before 10:15 and I'll make sure Jeremy gets them. If you wanted a quick overview on RRGs check out some of the posts above, or the below videos (which granted is a couple years old now). 

  • Questions on specific assets 
  • Questions on RRGs

Youtube videos here.

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Hey folks - we've had some replies to those two questions as bellow... 

On 16/05/2019 at 09:44, PandaFace said:

@JamesIG how do you translate the rotation into a buy/sell signal? 

"RRGs were never designed to be a trading system and have specific "rules" for entry and exit. They are much more a visualization tool. The best comparison is with a regular price/bar-chart. What are the entry and exit points there? Some use, for example, 10-day breakouts while others use 50-day breakouts. Same tool, different rules.

Also the time frame is very important. The image on a daily bar-chart is much more granular than on a weekly bar-chart. Same goes for a Relative Rotation Graph. RRGs based on daily data rotate much faster than RRGs using weekly data.

As a rule of thumb we know that for example crossovers from improving into leading are conservative, late, entries. Crossovers from lagging into improving are very aggressive, and therefore higher risk but a better reward when the rotation continues all the way through. The sweet-spot is probably somewhere in the middle depending on your risk-appetite."

On 16/05/2019 at 09:52, PandaFace said:

And which other indicators would you suggest to use along with RRG ? Other strength indicators I assume? 

"Personally I like to have what I call a "raw" relative strength line in my charts in combination with the RRG-Lines (JdK RS-Ratio and JdK RS-Momentum). If you want to combine a relative view with an absolute (price based) view I primarily use a plain vanilla bar-chart or candle-chart and maybe add a 9-period RSi and a MACD to asses trends in price."

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