RRG Chart
Relative strength and momentum of the 11 S&P 500 sectors, drawn as weekly tails.
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A Visual Guide to Sector Rotation and Market Leadership
The Relative Rotation Graph (RRG) is an advanced charting technique that plots sectors on a coordinate system showing both their relative strength (RS-Ratio) and momentum (RS-Momentum) versus the S&P 500 benchmark. The unique tail-like visualization shows the historical path each sector has traveled, making it easy to identify rotation patterns and predict future movements.
Sectors typically rotate clockwise through these quadrants over market cycles
Currently underperforming (RS-Ratio below 100) but showing signs of life with improving momentum (RS-Momentum above 100). These sectors are bottoming and may be preparing to rotate into leading. Early entry opportunities.
Action: Begin accumulation, watch for breakout
These sectors are the market leaders with strong relative strength (RS-Ratio above 100) and positive momentum (RS-Momentum above 100). They're outperforming the benchmark and accelerating higher. This is typically where you want to be invested.
Action: Maintain positions, add on pullbacks
The weakest sectors with both underperformance (RS-Ratio below 100) and negative momentum (RS-Momentum below 100). These sectors are falling behind the market and losing ground. Typically best avoided or used for tactical shorts.
Action: Avoid or reduce to minimum allocation
Still outperforming the market (RS-Ratio above 100), but momentum is slowing (RS-Momentum below 100). These sectors may be topping out and preparing to rotate into lagging. Watch for breakdown signals.
Action: Take profits, reduce exposure
Reading the Tails. The colored lines show each sector's recent path. Longer tails indicate faster movement. Watch for sectors making sharp turns at quadrant boundaries - these often signal major trend changes.
See which sectors are rotating in and out of favor before major moves occur
Time your sector allocation based on position and trajectory, not just price action
Maintain exposure to different rotation stages for balanced risk/reward
Spot sectors transitioning from improving to leading before the crowd notices
Pro Tip
Watch for sectors with short tails near quadrant boundaries. These are coiling up for potential explosive moves. The longer a sector stays in improving, the stronger the eventual breakout to leading tends to be.