Glossary
Ideas
Relative Rotations
What it is
A scatter plot showing all sector ETFs positioned by their relative strength vs the S&P 500 and momentum of that relative strength.
How to read it
Four quadrants describe the rotation cycle:
- Leading (top-right) — Strong relative strength, improving momentum — best positioned.
- Weakening (top-left) — Strong relative strength but momentum fading — watch for rotation out.
- Lagging (bottom-left) — Weak and deteriorating — avoid.
- Improving (bottom-right) — Weak relative strength but momentum recovering — potential early opportunity.
Why it matters
A sector entering the Leading quadrant from Improving is an early signal of emerging outperformance. One moving from Weakening toward Lagging is signalling the move may be over.
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