Question 1

What is market breadth and why does it matter?

Accepted Answer

Market breadth measures how many individual instruments are participating in a move, rather than what the headline index did. An index can rise while most of its members fall, because a handful of very large names carry it - the tape looks strong while the market is internally weakening. TraderAI computes the advance-decline line, the McClellan Oscillator and Summation Index, the percentage of symbols trading above their own 200-day and 50-day moving averages, new highs versus new lows, and the share of volume in advancing names. All of it is derived from public daily candles, so any number on the page can be re-derived independently.

Question 2

What is a Relative Rotation Graph (RRG) and how do you read it?

Accepted Answer

An RRG plots each symbol against a benchmark on two axes: RS-Ratio (how strong it is relative to the benchmark) horizontally, and RS-Momentum (whether that relative strength is improving or deteriorating) vertically. Both are normalised around 100, so the two axes split the chart into four quadrants that capital tends to rotate through clockwise: Improving, Leading, Weakening, Lagging, and back to Improving. The trail behind each point shows the recent path, which is what distinguishes a leader that is rolling over from a laggard that is turning up - a difference a single strength score cannot express. TraderAI computes it with the standard JdK RS-Ratio and RS-Momentum method on public daily closes.

Question 3

How is the 1-99 RS Rating calculated?

Accepted Answer

The RS Rating follows the IBD and MarketSmith convention: it is a percentile rank, not a return. TraderAI measures each symbol's performance RELATIVE to its market benchmark over four windows (roughly 3, 6, 9 and 12 months), weighting the most recent quarter double, then ranks every symbol in the peer universe on that weighted score and maps the ranking onto a 1-99 scale. Because it is relative, a rating of 90 in a falling market means the symbol fell far less than its benchmark, not that it rose. One important caveat the page states openly: a percentile is only as meaningful as the size of the peer group, so when a market's universe is small, TraderAI labels the sample as thin rather than presenting a two-digit rating as if it were precise.

Market Breadth & Internals

Market Breadth & Internals