Stocks don’t move alone. Capital rotates by sector first, stocks follow, and options traders who miss the tide are trading blind. See the tide first with the only professional-grade Relative Rotation Graph available for free, made possible by our Patreon supporters.
What is a Relative Rotation Graph?
A Relative Rotation Graph, often called an RRG, is a visual tool for comparing the relative strength and momentum of multiple stocks, ETFs, sectors, or assets against a common benchmark.
Instead of checking one chart after another, an RRG helps you see the whole market rotation in one view. It shows which assets are leading, which are improving, which are weakening, and which are lagging.
Why does sector rotation matter?
Because stocks rarely move in isolation. A strong company can struggle when its sector is under pressure, while an average stock can perform well when capital is flowing into its industry.
This is the tide effect. When the sector tide rises, many stocks inside that sector tend to rise with it. When the tide turns, even good individual names can get pulled lower.
That is why Relative Rotation Graph analysis is so useful. It helps traders see whether a stock is moving with sector strength, against sector weakness, or becoming an early leader before the move is obvious on a standard price chart.
How do I read the four RRG quadrants?
A Relative Rotation Graph is divided into four main quadrants.
- Leading means the asset is showing strong relative strength and positive momentum versus the benchmark.
- Weakening means the asset is still relatively strong, but its momentum is fading.
- Lagging means the asset is underperforming the benchmark with weak momentum.
- Improving means the asset is still relatively weak, but momentum is starting to recover.
The real value is not only where an asset is today, but how it rotates over time. Direction, speed, and position together give a clearer picture of changing market leadership.
How can traders use a Relative Rotation Graph?
Traders can use a Relative Rotation Graph to identify sector rotation, compare stocks against a benchmark, monitor watchlists, and find areas of the market gaining or losing relative strength.
For stock traders, it helps answer a simple question: is this stock leading the market, following the market, or falling behind?
For ETF and sector traders, it helps identify where capital is flowing.
For options traders, it adds another layer of edge. RRG analysis can help avoid selling premium blindly into strong directional momentum, identify better candidates for bullish or bearish structures, and compare whether a single stock setup is supported by broader sector strength or fighting against it.
Is a Relative Rotation Graph useful for options and volatility trading?
Yes. For options traders, relative strength is especially valuable because option trades are not only about direction. They are also about timing, volatility, probability, and structure selection.
A Relative Rotation Graph can help identify stronger names for bullish premium structures, weaker names for bearish structures, and cleaner candidates for relative-value trades. It can also help traders avoid forcing neutral short-volatility trades in assets that are showing aggressive trend acceleration.
For strategies such as credit spreads, diagonals, ratio spreads, covered calls, Jade Lizards, and earnings trades, RRG analysis can provide useful context before choosing direction, strikes, duration, and risk exposure.
Is this Relative Rotation Graph tool free?
This is the only professional-grade Relative Rotation Graph available for free, made possible by our Patreon supporters.
Our goal is to make advanced market rotation analysis more accessible to traders and investors who want a faster, cleaner way to compare stocks, ETFs, sectors, and market leadership in one visual view.