JdK RS-Ratio versus JdK RS-Momentum plot
The JdK RS-Ratio is a normalized measure of trend in relative strength. So be careful it is therefore not a measure of relative performance as such but it tries to pick up trends in relative performance end measure the strength of such a trend. The JdK RS-Ratio is the input on the horizontal axis on the RRG chart. A universe of stocks or sectors can be ranked based on the values of the JdK RS-Ratio, high values are good, low values are bad. Values over 100 indicate an up-trend in relative strength while values below 100 indicate a down-trend in relative strength.
The JdK RS-Momentum line is a normalized measure of momentum/rate-of-change of the RS-Ratio line and is, just like the RS-Ratio line itself, comparable across a universe of instruments. As a momentum / rate-of-change indicator is always leading the underlying (of which the rate-of-change is measured) you will note that the JdK RS-Momentum line will cross the 100-level upward when the RS-Ratio line has formed a trough and is starting to move up. JdK RS-Momentum will cross the 100-level downward when the RS-Ratio line has formed a peak and is starting to move downward.
JdK == Julius de Kempenaer
"RRG charts show you the relative strength and momentum for a group of stocks. Stocks with strong relative strength and momentum appear in the green Leading quadrant. As relative momentum fades, they typically move into the yellow Weakening quadrant. If relative strength then fades, they move into the red Lagging quadrant. Finally, when momentum starts to pick up again, they shift into the blue Improving quadrant."
Found in this ZeroHedge article.