Use Relative Performance Analysis

07/23/2009 9:41 am EST

Focus: STRATEGIES

Thomas Aspray

, Professional Trader & Analyst

chart
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I hope these two examples will illustrate the value of RS analysis. The RS on the tech sector ETF (XLK) completed its bottoming formation in February and has been leading the market higher amid heavy volume recently. In contrast, the RS for the homebuilders ETF (XHB) is much weaker as it shows a broad trading range.

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