ETF Trend Divergence

I've been looking more closely at ETFs again, specifically sector-related ETFs to track for ongoing top-down analysis. The issue with multicollinearity got me thinking about relative strength again. So far I haven't been systematic about assessing relative strength, and it just doesn't make sense to continue putting that on the backburner. I'm turning up enough trade setups with different scans that using industry group relative strength to filter and sort the scan results would be a great way to identify the absolute best opportunities.

So, while roaming around the web reading how others track sector ETFs, I came across a really good article in SmartMoney.com titled Profit From Sector ETF Trend Divergence. In addition to identifying the top three ETF families, it also talks about how you can use ETF trend divergence to make money during choppy, sideways markets. An excellent introduction to the topic! It also concludes by saying that if you spot the same divergences repeatedly, you are probably looking at institutional sector rotation.