Relative Rotation Strategies – RRS
Using the power of Relative Rotation Graphs (RRG), RRS provides superior performance by being in the right place at the right time!
The Relative Rotation Strategies consist of 1 stock strategy and 3 ETF strategies. Each of the 4 strategies is based on the same principle of using RRG to be in the right place at the right time. TPA provides different strategies to satisfy the various risk profiles, holding periods, and portfolio rules for all RRS users.
The strategies are:
- Relative Rotation Fund
- Top 5 and Bottom 5 ETFs
- Top 5 ETFs and a S&P500 Hedge
- Top 5 ETFs – Long Only
RSS Performance and relative performance for these strategies has been off the charts. The comparison performance table below is as of 6/5/23.
Equally important, the outperformance has been consistent since inception.
- The Relative Rotation Fund is created using the weekly Top and Bottom ranked stocks in the TPA-RRG report. The fund holds 60 stocks; 30 long and 30 short. The portfolio is created by buying the Top 10 and selling short the Bottom 10 ranked stocks weekly. Screens are used to ensure that overbought and oversold stocks are not included. Long positions have twice the weight of short positions. This is a nod to history, which has shown that stocks approximately go up twice as much as down on a daily basis. Since new stocks are added each week, each position is held for 3 weeks. Rebalancing occurs as close as possible to Friday’s closing prices. (Trades and returns are hypothetical.)
Each week the TPA-RRG Report scores and ranks its ETF universe and uses it for its RSS Strategies:
- Top 5 and Bottom 5 ETFs – Buys the Top 5 ETFs and Sells short the Bottom 5 ETFs each week. Each position is held for 3 weeks. The 3-week holding period means that each week we trade out of the positions from 3 weeks ago and add the current week’s TOP 5 and Bottom 5. Each week’s trades account for approximately 1/3 of the portfolio. Shorts are always ½ the value of longs.
- Top 5 ETFs and a S&P500 Hedge – Buys the Top 5 ETFs each week and maintains a long SH position that is ½ the value of the long ETFs.
- Top 5 ETFs – Long Only – Each week the TOP 5 ETFs are purchased. The holding period is 3 weeks. Each week accounts for 1/3 of the portfolio.
To further illustrate the power of RSS strategies, The image below shows the ranking each week for TECH (XLK) in the top panel and the relative performance chart of XLK (XLK/SPY) in the lower panel. Top ranking in the upper panel coincides with outperformance in the lower panel. In other words, TPA-RRG ranking keeps investors in outperforming sectors.
You can learn more about RRGs with these links:
Relative Rotation Graphs (RRG) – explanation video (Less than 4 minutes)
What is TPA-RRG. What are RRGs.
Jeff Marcus founded Turning Point Analytics (TPA) in 2009 after 25 years on trading desks and 13 years as a head trader to provide strategic and technical research to institutional clients. Turning Point Analytics (TPA) provides a unique strategy that works as an overlay to clients’ good fundamental analysis. After 10 years of serving only large institutions, TPA now offers its research services to mid and small managers, RIA’s, and wealthy sophisticated individuals looking for a way to increase their returns and outperform their peers.
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