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Weekly momentum update by RRG: 8 April 2022

Weekly momentum update by RRG: Julius De Kempenaer and Trevor Neil are the founders of Amsterdam-based RRG Research.

The weekly Relative Rotation Graph (RRG) below shows the rotation for major world stock market indices against the Morgan Stanley Capital International (MSCI) world index at the chart’s mid-point. 

Several tails are displaying weak rotations, notably Hong Kong’s HSI, Germany’s DAX, Europe’s STOXX, and France’s CAC. On this weekly RRG, all of them are travelling in a negative, south-west direction and are in or heading towards the lagging quadrant. The notable outperformer in the top-right corner is the Australian market.

Australian index on the up

Australia’s ASX 200, labelled on the above chart as AS51, is rotating strongly. It has the highest reading on the JdK RS-Ratio (X-axis). It is also rising slightly, indicating improving relative momentum as the Australian index benefits from soaring commodity prices amid a market boom. 

The weekly chart below highlights the strong performance of the ASX 200, which is trading close to its highs. This is in sharp contrast to most other major world indices, which are struggling. Below the price chart we see the JdK RS-Ratio and JdK RS-Momentum. Both are rising sharply, indicating that the ASX 200 is performing well with strong momentum. 

Chemicals firm Nufarm added to share basket

The Australia 200 RRG Momentum+ share basket attempts to capitalise on the high RRG momentum characteristics of the Australian market. We recently rebalanced the basket of ten shares to include Melbourne-headquartered agricultural chemical company Nufarm [NUF], which has been performing well. 
Having spent last year in the doldrums, Nufarm’s share price broke consolidation resistance at AU$5.25 and has moved ahead powerfully, as the chart below shows. The upward trend suggests that Nufarm is a beneficiary of the strong overall market advance and a high-momentum participant.

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