The thick grey line is the S&P 500 Index while the colored lines are the nine Sector SPDRs (colors are the same as on the chart below where there is a legend).
Method Two: Rebased Against Benchmark from X Date
The second method is to deduct the performance of the benchmark so that the absolute performance against the benchmark is plotted.
Sector Performance Rebased Against S&P 500
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The benchmark index (S&P 500 Index in this case) becomes the zero line after rebasing.
Method Three: RMI Paintbar and Histogram
Relative strength analysis is exactly what our RMI Indicators measure. The RMI.Histogram is another way to visualize performance. It provides a detailed, bar-by-bar account of a stock’s performance against the benchmark index (or a sector against a benchmark) and helps identify potential swing trade entry points.
The position of the green and red histogram bars relative to the grey threshold line is very important. A number of combinations and permutations can occur. Price bars are colored based on information contained in the histogram according to these rules:
- Green = Relative Outperformance = Histogram > 0 AND Histogram > Threshold Line
- Red = Relative Underperformance = Histogram < 0 AND Histogram < Threshold Line
- Yellow = POTENTIAL SWING TRADE ENTRY = all other combinations
In this case, we plot the individual Sector SPDR against the S&P 500 Index as the benchmark.
XLY Relative to S&P 500 Index
XLP Relative to S&P 500 Index
XLE Relative to S&P 500 Index
XLF Relative to S&P 500 Index
XLV Relative to S&P 500 Index
XLI Relative to S&P 500 Index
XLB Relative to S&P 500 Index
XLK Relative to S&P 500 Index
XLU Relative to S&P 500 Index
