Watch a dynamic demo of interest rate
fluctuations and especially an inverted yield
curve and its effects on the market...
You benefit from this rotation by being
able to identify which sectors are going up or down establishing a
trend. A trend up is higher highs and higher lows and a
downtrend is lower highs and lower lows. We are not interested
so much in the day-to-day rotation as we are in trending rotation,
i.e. those sectors leading the market up/down over a verifiable
trend and time. In short, a trend that has substance or legs
Though this daily sector rotation might
appeal to day traders, the sector rotation I'm speaking of is more
basic than that and tends to be of much longer duration because it
is tied to changes in the economy which happen over time not
overnight. I am looking for those sectors that have been
pushing the market in one direction or another in recent weeks, if
I review the rotation behavior weekly during
routines. Probably the most
comprehensive of sector rotation sites are
www.barchart.com. I will show you
how to use these during our sessions. For ALL the
sector/industry symbols known to man visit stockcharts.com on this
specific page, click
These are great sites to spend time on the weekend seeking trades in
the right sectors for the coming week.
big institutional money moves the markets, shouldn't you be
following that money? Institutional money managers are not
day traders. They are following the sector strengths and
to a perceived
for many months in the future because of
basic changes in the economy and thus trends develop.
You and I know that prices rise and fall in a longer term trend.
Of course we traders want to take advantage of that.
Is it even possible to be
short the sector that is being drained
while I'm long the sector that rising? Yes.
Ultimately, I am trying to identify and participate in those
sectors that are pushing the broad markets. Could you
enhance your trading by working in these sectors, the sectors that
in fact are gaining or losing so much big, big money that their
momentum has a life of its own? I believe you can and
You must stay on top of the rotation to see
the big picture. Ultimately, you will have a stock, a sector
and a market all going in the same direction. Pull up all
three charts, the
S&P500 chart, the
sector chart you're interested in and
the stock chart
at the same time. Do they support each other? If so,
you have just enhanced your probabilities...isn't that what we're
trying to do, to put the odds in our favor?