Chapter 9
The Direction of Momentum
I don’t think trading strategies are as vulnerable to not working if people know about them as most traders believe. If what you are doing is right, it will work even if people have a general idea about it. I always say that you could publish trading rules in the newspaper and no one would follow them.
—Richard Dennis, from Market Wizards1
The notion of the relative strength spread (RSS) occurred to me in the mid-1990s, and I continued after that to pursue a coherent approach to trading based on feedback. The outline of a strategy formed early on. When positive feedback (momentum) is present, it makes sense to buy the strongest groups in a rising market and to sell the weakest in a falling market. If so, then ...
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