The RSC is an acrynomn for Relative strength comparison. The aim when using this is to do a scan of the XAO/XJO and scan for the sectors that are out performing these indexes. Once you identify these sectors out performing the indexes you scan for the strongest stocks in these sectors. The methodology is that smart money moves from one sector to another and by identifying these sectors and identifying the strongest stocks in these sectors and investing accordingly you reduce your investment risk and increase your chances of making profits. The XJM (Materials) sector started out performing the indexes in late November and have been the strongest sector for the December rally. The XJM is still 25% above its November low whereas the XAO/XJO are only 4-5% above their November low. One thing you need to be aware of is that a sector could out perform the indexes whilst in a down trend merely due to the fact that that sector is not falling as fast as the indexes so it is adviseable to view a chart of the sector and verify that it is in an up trend. The XZO (Pharmaceuticals) sector for example out performed the XAO/XJO from July to September. A scan carried out in mid July would have had you making profits in the market when everyone else was crying crash/end of the world. The US health sector has just started to out perform the S&P/DJIA. The XZO on the ASX (Pharmaceuticals) sector has been out performing the indexes since 19 December. Do the people investing in the XZO see the same problems ahead in the indexes as they saw in July 08? Who knows, but a RSC scan of the sectors will tell you where the smart money is being invested! Ride the investment wave, don't try investing in sectors that are not out performing the indexes because you are fighting the out going tide. Metastock has a formula for such scans as does my other program Trade Master. I assume other programs have similar.
