Assumed (just as an example) I compare a sector ETF such as XLF vs. SPY. The RS-Ratio and the RS-Momentum of the XLF are over 100. This means the trend and strenth of XLF is up. If I go long by XLF, I can make profit.
But, since RS-Values of XLF are "relative" to that of the SPY, and if SPY is going down faster than the XLF, the XLF can have RS-Values over 100. If I go long on XLF, I can get loss. Is that right?
so I think, I should go long on XLF and at the same time go short on SPY. Am I right?
Cheers
Thomas
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