Relative Strength Rank & Trend Reports
The Relative Strength (RS) Rank Trend report compares and ranks the magnitude of price changes over a specified period of time in a group of two or more ETFs.
Price performance of all ETF's within a group are compared to the price performance of a specific ETF, known as the benchmark. Typically the SPY, an ETF that represents a basket of top 500 largest company stocks d in the United Stages. Price performance of all stocks is compared to the price performance of the SPY, the stocks are then ranked according to which had the highest magnitude of price increase vs. the SPY and which had the lowest (or potentially a price decrease). Each of those snapshots in time is then trended across days and weeks and month.
A Relative Strength comparison is like gauging how the outcome of of theer is crowned. Here instead of games, each snapshot is a comparisond of trading days. We trend the relative rankings of key ETF prices over time across multiple lookback periods. As a season progresses, some teams get hot and improve their rank in the standings. Others go on a losing streak and their rank in the standings falls. Increases or decreases in relative price performance compared to other ETF's can precede increases or decreases in price. That's why use it to gain an edge in directional trading. Remember, if the market is going down from one trading day to the other, but relative strength rank of a particular ETF is rising, that's no guarantee that the ETF's net asset value is appreciating in price. It could simply mean that the ETF is falling at a slower rate compared to the market.