Relative Strength Analysis
figure 24.19 Performance Charts Indicating Inverse Relationships.
Source: StockCharts.comfigure 24.20 Correlation Study on RS Charts.
Source: StockCharts.comFigure 24.20 illustrates the correlation between the RS line of the Consumer
Staple SPDR/Consumer Discretionary ratio and the S&P 500 Index. We see that
they are negatively correlated after 2008, once the quantitative easing commenced.
Notice also that the RS line reacts to its own historical highs, reversing every time
it tests the upper extreme levels.