Industry Rotation(Also known as sector rotation) Refers to the phenomenon of funds circulating cyclically among different industries. Traditional methods rely on turnover rankings or gain/loss lists. The problem is that such indicators are greatly affected by weight stocks and individual anomalous stocks—one large-cap stock hitting the limit up can distort the industry's average gain/loss.
RPS (Relative Price Strength) provides another path: It first converts each stock's interval gain into a percentile ranking across the entire market, then countsthe proportion of stocks in the industry with RPS ≥ 90 to the industry's sample. This ratio measures the 'density of strong stocks in the industry', which is a count-type indicator, not affected by the gain/loss amplitude of individual stocks. If one-third of the components in an industry enter the top 10% of the entire market, it indicates that funds are systematically allocating to that industry rather than speculating on individual themes.
Core Formula: Industry Strong Concentration = Number of Stocks with RPS ≥ 90 in the Industry ÷ Effective Sample Size of the Industry × 100%
where RPS is the percentile ranking of interval gains in the entire market (0–99). Calculation method detailed in RPS Methodology。
The table below is based on all valid samples from the four markets on the current day, calculated using RPS90 (approximately 90 trading day interval). Only industries with sample sizes ≥ 20 are retained to avoid inflated proportions from small-sample industries due to small denominators.
| Industry | Sample Size | Number of RPS ≥ 90 | Strong Concentration |
|---|---|---|---|
| Electronics | 414 | 148 | 35.7% |
| Machinery | 407 | 64 | 15.7% |
| Telecommunications | 97 | 14 | 14.4% |
| Financial Industry | 87 | 12 | 13.8% |
| Non-ferrous Metals | 85 | 10 | 11.8% |
A-shares overall strong stock proportion is 549 ÷ 5,212 = 10.5%. Electronic industry's 35.7% concentration is 3.4 times the market benchmark, with sample size reaching 414 stocks, statistically representative. In comparison, although mechanical equipment has a similar sample size (407 stocks), its concentration is only 15.7%, and the difference indicates that funds in the current period are clearly biased toward the electronic industry chain.
| Industry | Sample Size | Number of RPS ≥ 90 | Strong Concentration |
|---|---|---|---|
| Information Technology | 57 | 22 | 38.6% |
| Technology | 498 | 151 | 30.3% |
| Health Care | 861 | 204 | 23.7% |
| ETF:Technology | 188 | 38 | 20.2% |
| Consumer Discretionary | 809 | 153 | 18.9% |
US stocks overall strong stock proportion 855 ÷ 8,483 = 10.1%, close to A-shares (this is an inevitable result of the RPS percentile definition, not representing the same performance between the two markets). It is noteworthy that Health Care, with the largest sample of 861 stocks, still maintains 23.7% concentration, with the absolute number of strongly strong stocks (204 stocks) being the highest in the market, belonging to a 'width-type' strong industry; while Information Technology has only 57 stocks, and the high proportion of 38.6% more reflects concentrated outbreaks in sub-sectors.
Another signal that can be cross-verified is ETF:Technology sector 20.2% concentration — ETF reflects the direction of passive fund allocation, which is consistent with the individual stock Technology sector (30.3%), indicating that this round of technology strength has incremental fund support, rather than merely position speculation.
| Industry | Sample Size | Number of RPS ≥ 90 | Strong Concentration |
|---|---|---|---|
| Information Technology | 320 | 51 | 15.9% |
| Industrials | 522 | 67 | 12.8% |
| Consumer Discretionary | 472 | 51 | 10.8% |
| Communication Services | 160 | 17 | 10.6% |
| Financial Services | 221 | 21 | 9.5% |
HK Stocks' strongest industry concentration is only 15.9%, far lower than A-shares electronic (35.7%) and US stocks technology (38.6%). This horizontal comparison reveals a characteristic of the current HK stocks:Lack of a Clear Leading Sector, strong stock distribution is relatively dispersed. For investors using RPS to select stocks, in such market environments, the screening value at the industry level decreases, and screening at the individual stock level becomes more critical.
| Industry | Sample Size | Number of RPS ≥ 90 | Strong Concentration |
|---|---|---|---|
| Banking | 79 | 26 | 32.9% |
| Electrical Machinery | 224 | 61 | 27.2% |
| Precision Machinery | 52 | 13 | 25.0% |
| Glass and Stone Products | 49 | 9 | 18.4% |
| Pulp & Paper | 24 | 4 | 16.7% |
Japanese Stocks show a structure different from the other three markets:Finance (Banking 32.9%) and Manufacturing (Electrical Machinery 27.2%, Precision Machinery 25.0%) are both strong simultaneously. Banking has only 79 stocks but 26 enter the top 10% of the entire market. Such high concentration is usually related to changes in the interest rate environment and belongs to typical macro-driven rotation.
RPS values cannot be directly compared across markets.RPS is a percentile ranking within the market. A-shares RPS 95 and US stocks RPS 95 only indicate that they rank in the top 5% within their respective markets, not representing equal gains/losses between the two, nor identical investment value.
Cross-market comparison can be made forStructural Indicators, such as the industry strong concentration mentioned above, the multiple relationship between the strongest industry and the market benchmark, and the dispersion of strong stocks across industries. These are ratio and distribution characteristics, unaffected by the absolute gain/loss amplitudes of each market.
Based on this principle, the following is the current structural comparison across four markets:
| Market | Overall Strong Stock Proportion | Strongest Industry Concentration | Multiple Relationship | Structural Characteristics |
|---|---|---|---|---|
| China A-shares | 10.5% | Electronic 35.7% | 3.4× | Single Main Line Highlighted |
| US stocks | 10.1% | Info Tech 38.6% | 3.8× | Technology + Healthcare Dual Main Lines |
| Hong Kong stocks | 10.1% | Information Technology 15.9% | 1.6× | No Clear Leading Sector |
| Japanese stocks | 10.1% | Banking 32.9% | 3.3× | Finance and manufacturing in tandem |
The "Multiple" column (strongest sector concentration ÷ overall share) is a practical indicator of rotation clarity. Higher values indicate that capital is more concentrated in specific sectors, enhancing the effectiveness of trend-following strategies; the low multiple of 1.6× for Hong Kong stocks suggests that sector rotation is not pronounced in the current period.
Combining William O'Neil's discussion of market cycles in the CANSLIM system with this site's cross-sectional data observations, sector rotation typically exhibits the following evolutionary process. It should be noted that the stage classification is a post-hoc analytical framework and does not possess real-time predictive capability.
Within the sector, 3–5 stocks see their RPS jump from below 60 to above 85, but overall sector concentration remains below the market benchmark. At this stageturnoveroften expands ahead of price, serving as an early sign of capital inflows. Relying solely on RPS makes it difficult to identify opportunities at this stage, as the rise in percentile ranking requires time to accumulate.
Strong stocks spread from leaders to second- and third-tier names, with sector concentration breaking above 2 times the market benchmark. This is the most effective window for RPS sector analysis—the A-share electronics 3.4× and U.S. technology 3.8× mentioned above are both in this state. At this stage thevolume-price coordinationfeature is moderate expansion of trading volume rather than a spike; a single-day volume surge often signals a staged top.
Sector concentration reaches an extreme then begins to decline, while absolute prices continue to rise—this is a typical top-divergence signal. It manifests as fewer new strong stocks emerging in the sector, with leaders maintaining high RPS while followers see RPS weaken. At this timemarket breadth(the proportion of advancing stocks) has typically already begun to narrow.
The number of stocks with sector RPS ≥ 90 decreases by more than half within 4–8 weeks, and concentration falls back to around or below the market benchmark. This process is often accompanied by capital flowing into new sectors, forming the next round of rotation.
Practical Tip: This site updates RPS data for four markets daily; the current stage can be judged by comparing consecutive multi-day changes in sector concentration.Weekly RPS Market Report It records snapshots of sector distribution for each market in the current period, which can serve as historical references for longitudinal comparison.
RPS is a pure price-strength indicator that does not incorporate volume, valuation, or fundamental information. In practice it needs to be cross-validated with other dimensions.
turnoverIt reflects the activity of share turnover. For two stocks with identical RPS 90, if one maintains historically high turnover while the other is moderate, the former has a less stable chip structure. O'Neil emphasizes when describing breakout patterns that "volume on the breakout day should exceed 40%–50% of the 50-day average volume," which is essentially a quantitative requirement forvolume-pricecoordination.
High RPS but price located moving averagebelow the system typically means the strength originated from earlier gains and has recently weakened—this is the inherent lag of RPS as a period-cumulative indicator. A commonly used filter in practice is "RPS ≥ 90 and price above the 50-day moving average" to exclude names that have entered a pullback .
market breadthIt measures the proportion of advancing stocks among all stocks and is a prerequisite for judging the overall environment. In an environment where breadth remains continuously below 40%, even if individual-stock RPS is high, the holdingriskalso rises significantly. TheMarket trendmodule on this site's homepage provides an observation portal for this dimension.
RPS does not provide sell signals, so it must be supplemented withstop-lossrules. O'Neil's classic suggestion is an unconditional stop-loss 7%–8% below the buy price, which is unrelated to RPS and constitutes an independent risk-control layer.PositionIn this regard, environments with high sector concentration are suitable for relatively concentrated holdings, while environments such as Hong Kong stocks lacking a clear leading theme should be diversified.
Notes on Backtesting and Win Rate: This site does not provide strategybacktestingresults, nor does it claim anywin ratedata. The reason is that RPS itself is only a ranking tool rather than a completetrading system—backtest conclusions highly depend on trading rules, stop-loss settings, position management and transaction cost assumptions; win-rate numbers detached from these premises have no reference value. This site is positioned as a data and ranking provider; specificstock-selection strategiesmust be constructed and validated by the user.
The analysis on this page is based on several explicit premises; users should understand these boundaries:
| Limitation | Specific Description |
|---|---|
| Cross-sectional rather than time-series | Data on this page are a 2026-08-13 single-day snapshot and do not constitute a trend judgment. The staged implications of sector concentration require consecutive multi-period data for support. |
| Differences in sector classification | A-shares have 124 categories, U.S. stocks 61, Hong Kong stocks 14, Japanese stocks 33, with extremely large differences in classification granularity. Hong Kong stocks having only 14 categories implies high mixing within a single sector, so the resolving power of the concentration indicator is lower than for A-shares. |
| Small-sample bias | Sectors with sample sizes below 20 have been excluded, but Information Technology (57 stocks), Banking (79 stocks) and others still constitute small-to-medium samples whose ratio volatility is higher than that of large-sample sectors. |
| ETF inclusion | The U.S. sample includes ETFs (ETF category totaling over 1,900), whose price behavior differs from individual stocks and will affect the overall percentile distribution. Distinction should be noted when observing individual-stock sectors. |
| No look-ahead bias | All RPS calculations use only historical closing prices as of the snapshot date and contain no forward-looking information. This also means RPS cannot predict the future; it only describes relative performance that has already occurred. |
They are basically synonymous. “Industry” tends toward standardized classification by main business (such as CSRC industry or GICS), while “sector” in the Chinese context has a broader scope and may include conceptual sectors, regional sectors, and other non-industry dimensions. All data on this page is based on standard industry classifications and does not involve conceptual sectors.
Average gains are severely affected by outliers. If an industry has 100 stocks, of which 1 doubled and 99 fell 5%, the average gain is still positive, but it clearly cannot be called a strong industry. RPS concentration is a count-based indicator that measures “how many entered the top 10%” and can avoid this problem.
There is no absolute threshold; it should be compared with the overall proportion of strong stocks in that market. Since RPS ≥ 90 is by definition the top 10% of the entire market, the overall proportion will necessarily be close to 10%. An industry concentration of 20% is 2 times the benchmark, and above 30% is considered significant concentration.
Four-market RPS data is updated after the close of each trading day. The industry concentration table on this page is a 2026-08-13 snapshot; for longitudinal historical records, please refer toWeekly report archive. For data coverage and field definitions, seeFour-Market Data Coverage Archive。
Calculate the proportion of stocks with RPS ≥ 90 within an industry relative to the industry sample (strong-stock concentration), then compare with the overall proportion of strong stocks in that market (approximately 10%). A concentration reaching 2 times the benchmark or more indicates an industry with clear capital inflows. 2026-08-13 empirical results: A-share Electronics 35.7% (3.4 times), US stocks Information Technology 38.6% (3.8 times), Japanese stocks Banking 32.9% (3.3 times), Hong Kong stocks Information Technology 15.9% (1.6 times). Hong Kong stocks have the lowest multiple, indicating a lack of a clear leading sector in the current period. This indicator is count-based and is not affected by extreme gains of individual stocks, but RPS values themselves cannot be compared across markets.
Data snapshot: 2026-08-13 | Sample: 21,308 stocks | For calculation method, see RPS Methodology、data overlay file| For editorial standards, see Research Notes
Technical analysis is typically divided into four groups: trend, oscillator, volume, and relative strength.Technical analysisThe most common indicators such as MACD, KDJ, RSI, and Bollinger Bands all belong to the first three categories; their common point isthey only observe the price series of a single instrument itself— when calculating the RSI of a stock, there is no need to know the performance of other stocks.
RPS belongs to the fourth category and is a relatively niche branch of technical analysis: it must first obtain the gains of all instruments in the entire market, then perform a cross-sectional ranking. Thiscross-sectionalcharacteristic makes the questions answered by RPS different from traditional technical analysis — MACD answers “how is the trend of this stock itself,” while RPS answers “where does this stock rank in the entire market.”
Therefore, in actual technical analysis processes, the two types of indicators are usually complementary rather than substitutes: first use RPS to screen a relatively strong candidate pool from thousands of instruments (cross-sectional screening), then use traditional technical analysis tools such as moving averages, volume-price, and patterns to determine the buy/sell timing of individual stocks (time-series judgment). This is also the basic structure of William O'Neil's CANSLIM system — the RS component is responsible for the stock selection range, while pattern and volume analysis are responsible for the entry timing.
Further:RPS Industry Rotation Analysis(usage in conjunction with turnover rate, moving average structure, and market breadth) |RPS Methodology｜RPS Trading Tutorial