OPEN-SOURCE SCRIPT

Sector Rotation Momentum Framework

Overview
Markets rarely move with every sector advancing or declining at the same pace. At different stages of the market cycle, some sectors may strengthen while others lose momentum.

This framework compares the performance of a selected stock with a related sector ETF to provide additional context when evaluating trend direction. Rather than analyzing a stock in isolation, the script studies whether the stock is outperforming or underperforming its sector over time.

The objective is to demonstrate one approach to incorporating relative performance into a rules-based trading framework.

Core Idea
A stock's price movement can be viewed alongside the broader sector it belongs to.
For example:

NVIDIA compared with the Technology Select Sector SPDR Fund (XLK)
JPMorgan Chase compared with the Financial Select Sector SPDR Fund (XLF)
Exxon Mobil compared with the Energy Select Sector SPDR Fund (XLE)

Comparing relative performance may provide additional context when studying trends.

Strategy Logic

Relative Performance
The framework calculates a ratio between the current chart and a selected benchmark ETF.

When the ratio increases, the stock is outperforming the benchmark.
When the ratio decreases, the stock is underperforming the benchmark.

Trend Confirmation
A moving average is used to identify the primary trend on the current chart.

Relative Strength Filter
Trades are evaluated only when both:

The trend direction aligns with the moving average.
Relative performance remains above its smoothing average.

Risk Management
ATR-based stop-loss and target levels adjust according to market volatility.

Features

Relative performance comparison
Sector benchmark analysis
Trend confirmation
ATR-based exits
Configurable benchmark symbol

Intended Use
This framework is designed as an educational example of comparing a security with a sector benchmark. It can be used to study:

Relative performance
Trend alignment
Sector participation
Cross-market comparison

Disclaimer
This script is provided for educational and research purposes only. It demonstrates one approach to comparing a security with a benchmark using Pine Script. It does not predict future market behaviour and should be independently tested before being incorporated into any trading workflow.

오픈 소스 스크립트

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면책사항

해당 정보와 게시물은 금융, 투자, 트레이딩 또는 기타 유형의 조언이나 권장 사항으로 간주되지 않으며, 트레이딩뷰에서 제공하거나 보증하는 것이 아닙니다. 자세한 내용은 이용 약관을 참조하세요.

오픈 소스 스크립트

PinegenAI

🚀 PineGen AI — the dedicated Pine Script AI tool. Describe any strategy, get 100% bug-free, compiler-checked Pine Script v6 code in seconds.

Try it free: pinegen.ai/

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