We can use a tool called a Relative Rotation Graph, or RRG, to compare how different market sectors are doing. It shows which groups are getting stronger and which are falling behind.
By looking at a simple list that ranks sectors, we can see which areas are leading the market. Combining that list with a check of growth versus value helps us decide if a sector is expanding fast or just staying steady.
Another useful measure is the relative strength ratio. This number compares a sector’s performance to the overall market. A high ratio means the sector is beating the market, a low ratio means it is lagging.
When all three tools point to the same sector, it often means a new leader is emerging before most investors notice. Watching for these signals can give you a head start.
One warning sign is when technology’s relative strength starts to drop while other sectors climb. That can indicate the tech boom is losing steam and other areas may take over.
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