Relative Rotation Graph

Each stock or sector gets plotted using two values - relative strength and relative momentum, both compared to a benchmark. As these values change, the point doesn’t stay still, it starts moving across the chart. Over a few sessions, you’ll see a path forming. That path is usually what people follow, not just the current position.

Leading is where both relative strength and momentum are positive - these are usually the outperformers. Lagging sits on the opposite side, where both are weak. Improving is where momentum has started picking up, but relative strength is still catching up. Weakening is a bit different - strength is still there, but momentum has already started to drop off.

It’s mainly used to track where leadership is shifting. For instance, when a sector moves from Improving into Leading and stays there for a few rotations, it tends to attract more interest. On the flip side, when something drifts from Leading into Weakening, you’ll often see it slow down even if price hasn’t fully reacted yet.

Yes, both are used. A lot of people start with sectors to understand broader rotation, then move into stocks within those sectors to see which ones are actually leading. It’s usually not done in isolation.

Depends on the timeframe you’re looking at. On shorter timeframes, the movement is quicker - rotations happen faster, sometimes a bit noisy as well. On higher timeframes, the shifts are slower but usually more stable, especially when leadership changes.

The tail shows how the asset has moved over the last few periods. If the tail is stretching out in a consistent direction, it usually means the shift in relative strength and momentum has been steady. Shorter or choppy tails tend to show less conviction or frequent reversals.

Sometimes it does, especially during quadrant transitions. When something starts moving out of Weakening and holds in Improving for a bit, it often shows momentum picking up before it becomes obvious on price. Same the other way - Leading to Weakening is usually where momentum starts fading first.

It’s not difficult, but it’s not something you read instantly either. Understanding what RS and momentum are doing together takes a bit of time. Most people get comfortable after watching how a few stocks move across quadrants over multiple sessions.