Self Directed Investor Inc
SDI: "Empowering investors with ideas and education"
Symbol Lookup »  
Topics:ChinaETFsEarningsEconomyEnergyForexGoldIncomeLessonsIdeasTrading

  • Other news: News from PR Newswire
| More

Bullish Signs from the March 2012 Sector Rotation Model

Tue, Mar 27, 12:22 PM ET, by Corey Rosenbloom

What is the broader Sector Rotation Model saying about the current rally and state of the market?

Good things actually.

Let’s take a moment to view the current Sector Rotation Performance from three perspectives, starting with Absolute Performance so far in 2012:

To recap, the Sector Rotation Model breaks down the broader market into nine sectors as represented above with the tradable AMEX Sector SPDRs (XLK for Technology for example).

These nine sectors are divided into two broad categories:

  • Offensive/Aggressive Sectors (tend to outperform in a Bull/Rally mode)
  • Defensive/Conservative Sectors (tend to outperform in a Bear/Decline mode)

By assessing which sectors are outperforming, a trader or investor can get a sense of the broader stock market and economy.

In addition, savvy traders can scan to locate the strongest relative stocks in the strongest relative sectors for short-term trading opportunities (go with the winners!).

Ok, so what is the Model saying?

This is the picture of Bullish Strength – mainly in terms of the strong outperformance (greatest percentage increase in 2012) coming from the aggressive/offensive sectors of Financials (XLF), Technology (XLK), and Consumer Discretionary/Retail (XLY).

By the same token, the weakest sector performance comes from the Defensive sectors of Consumer Staples (XLP), Health Care (XLP) and a slight negative return (down 2.3%) for Utilities (XLU).

Energy – despite the headlines – is also an underperformer at 5.7%.

The next chart shows the sector performance RELATIVE to the S&P 500 (which is up roughly 13%):

This is just another way to view the performance where we ‘flatline’ the S&P 500 and then view the over or under-performance (relative to the 13% mark).

This perspective gives a clearer perspective of where sector strength or weakness resides – which is clearly in the Defensive (and Energy) sectors.

This next chart is a more advanced “Line” perspective of sector performance so far in 2012:

This chart is helpful to assess the trends in price, rather than the frozen “snap-shot” in time that the other charts provide.

You can also use it to view sector “clusters,” which is where different sectors cluster or travel together.

Two examples would be the XLI and XLB cluster (with the S&P 500) near 13% and the XLP, XLE, and XLV (defensive) cluster near the 5% line.

Again, the weakest sector is – and has been – Utilities (XLU) through 2012.

We generally do best to trade WITH sector trends rather than against them – meaning it would have been far more profitable to trade long with financials so far than trying to call a top and play a reversal.

The same is true with Utilities which were weakest from the start… and continued to be weak into late March (present).

Again, to me, the surprise from teh charts above is the Energy (XLE) sector which is registering a plus 6% performance – with all the focus on oil prices, one would expect the XLE to be among the top performers.

Anyway, continue watching the current Sector Performance for…

  • any signs of continuation (which suggests further bullish stock market activity into the future) or else
  • a reversal/rotation away from these developments (meaning a sudden reversal towards the Defensive Sectors and away from the Offensive Sectors would argue the opposite).

Be sure to view additional articles on previous Sector Rotation updates for more information:

“Sector Rotation Lessons and Insights from 2011″ (important reference post)

“What the Sector Rotation Model is Saying in July 2011″ (Bearish… and correct)

“Clear Bearish Signals Developing from the Sector Rotation Model” (May 2011 – right at the Top)

“Sector Performance from August to February (2011)” (Bullish insights)

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter: http://twitter.com/afraidtotrade

Corey's new book The Complete Trading Course (Wiley Finance) is now available!

blog.afraidtotrade.com


SDI Glossary: "Bearish" Definition
SDI Glossary: "Bullish" Definition
SDI Glossary: "price" Definition
SDI Glossary: "Finance" Definition
SDI Glossary: "Sector" Definition
This Article's Word Cloud:   Again   Bearish   Bullish   Consumer   Corey   Defensive   Energy   Model   Offensive   Performance   Rotation   Sector   Sectors   Technology   This   Utilities   afraidtotrade   also   broader   chart   charts   cluster   current   from   into   market   meaning   mode   more   next   nine   outperform   performance   perspective   relative   reversal   same   saying   sector   sectors   stock   strongest   tend   than   view   weakest   where   which   with   would

| More

Two Trend Days in a Row? Join Me for a Live 10 Tips for Trading Trend Days Webinar Thursday!
Wed, May 27, 4:21 PM ET, by Corey Rosenbloom

Two Trend Days in a row?! Did you kill it profiting from the simple trading ...

May 27 Rally Up Market Update and Big Stock Scan
Wed, May 27, 2:11 PM ET, by Corey Rosenbloom

Resiliently, buyers thrust the market higher off support to trigger ANOTHER Trend Day so far. ...

Three Suddenly Strong Stocks to Study
Wed, May 27, 12:51 PM ET, by Corey Rosenbloom

During recent stock scans, I came across three “Suddenly Strong” stocks I wanted to share ...

A Quick Lesson in Trading Reversals from Support with Divergences
Wed, May 27, 11:11 AM ET, by Corey Rosenbloom

One of my all-time favorite trade set-ups is the play into higher timeframe support with ...

Breakdown Stock Scan and Trend Day Market Update May 26
Tue, May 26, 2:21 PM ET, by Corey Rosenbloom

We’re finally seeing some action in the market after a flat, range-bound, divergent, false breakout ...

Four Market Money Flow Update on Today's Big Move
Tue, May 26, 11:21 AM ET, by Corey Rosenbloom

The US Stock Market sell-off isn’t the only big money flow event happening today. Gold ...

Overdue Retracement Triggers in US Stock Market
Tue, May 26, 10:41 AM ET, by Corey Rosenbloom

We’ve been waiting for this moment as the market crept to new highs on massive ...

Wednesday Webinar: Five Step Checklist for Finding the Next Hedge Fund Darling Stocks
Mon, May 25, 3:21 PM ET, by Corey Rosenbloom

This should be an interesting, can’t miss webinar! John Carter is providing for us a ...

Textbook Arc Rounded Reversal for High Flying Airlines
Mon, May 25, 3:11 PM ET, by Corey Rosenbloom

A beautiful chart pattern played out on two airline stocks – Southwest and United Airlines. ...

Key Make or Break Level Here for the US Dollar this Week
Mon, May 25, 2:51 PM ET, by Corey Rosenbloom

Will it or won’t it? The US Dollar Index faces a breakout – or reversal ...

Join Me Thursday for a Special "Ten Tips for Trading Trend Days" Live Webinar!
Fri, May 22, 9:51 PM ET, by Corey Rosenbloom

I’m very excited about a special upcoming opportunity with Trader Kingdom where I’ll collect my ...

How to Use Breadth to Make Sense of a Hideous Flat Market Range
Fri, May 22, 2:41 PM ET, by Corey Rosenbloom

How in the world do you make any actionable sense at all of this pattern ...

May 22 Stock Scan and Range Day Holiday Update
Fri, May 22, 2:21 PM ET, by Corey Rosenbloom

Buyers continue to enact their will on the market, preventing what would otherwise be a ...

Perfect ABCD Pullback Example in Crude Oil
Thu, May 21, 2:21 PM ET, by Corey Rosenbloom

When we last left Crude Oil in our updates, it was trading down into a ...

May 20 Melt Up Market Update and Big Bullish Stock Scan
Wed, May 20, 2:41 PM ET, by Corey Rosenbloom

The market was at risk for a “Melt Up” or “Collapse Higher” today and heated ...

Still Planning a Breakout or Reversal in the SP500 Wedge
Wed, May 20, 11:41 AM ET, by Corey Rosenbloom

Is today the day price will break violently higher in a short-squeeze… or else fall ...

Strongest and Weakest Dow Jones Stocks on May 19 Volatile Session
Tue, May 19, 4:21 PM ET, by Corey Rosenbloom

Let’s dig a little deeper to find which stocks are participating with today’s spastic trend ...

New John Carter Video on How to Find Stocks Before Hedge Funds Get In
Tue, May 19, 10:11 AM ET, by Corey Rosenbloom

I really found John Carter’s new video training interesting and learned a few facts I ...

Melt Up Market Update and Diverse Stock Scan May 18
Mon, May 18, 2:51 PM ET, by Corey Rosenbloom

The market was at risk for a “Melt Up” or “Collapse Higher” today and heated ...

Today's Strongest and Weakest Dow Stocks Right Now May 18
Mon, May 18, 12:31 PM ET, by Corey Rosenbloom

With the market tilting toward the “Breakout” or “Melt-Up” outcome I highlighted in this morning’s ...

Breakout or Bull Trap? A Quick Plan for the SP500 and Dow Now
Mon, May 18, 11:21 AM ET, by Corey Rosenbloom

Right now we’re playing the “Will it really break out or is this just another ...

What We Thought was a Sideways Range was NOT What We Assumed
Fri, May 15, 6:11 PM ET, by Corey Rosenbloom

Quite simply, what we THOUGHT was a Sideways Range was NOT actually a Sideways Trading ...

What is Moving in the Market Today Update and Stock Scan May 15
Fri, May 15, 1:41 PM ET, by Corey Rosenbloom

What’s going on behind the scenes of the stock market today as a possible Bull ...

A Quick Way to Chart the Cycles in Volatility
Thu, May 14, 3:11 PM ET, by Corey Rosenbloom

There’s a quick and easy way to chart Volatility and assess whether we’re in a ...

Is This the Tradable Breakout in Gold?
Thu, May 14, 10:31 AM ET, by Corey Rosenbloom

Wednesday saw a huge impulse movement for Gold into a key target. What happens if ...

Still on Breakout Watch for the SP500
Thu, May 14, 10:11 AM ET, by Corey Rosenbloom

2015 so far has given us two tight range consolidations in the S&P 500 and ...

Revisited - Stepping Inside a Volume Divergence
Wed, May 13, 10:41 AM ET, by Corey Rosenbloom

What happens when price rallies into resistance with declining (diverging) volume? Let’s step inside this ...

Revisiting How to Trade a Simple Bull Flag
Tue, May 12, 4:41 PM ET, by Corey Rosenbloom

One of my favorite intraday patterns is the bull and bear flags. How do you ...

Quick Insights on Volume and Open Interest
Tue, May 12, 10:31 AM ET, by Corey Rosenbloom

Traders frequently combine volume studies with price studies and indicators to gather a larger picture ...

CME Breaks into Open Air Buy Zone to Continue Strong Uptrend
Mon, May 11, 11:11 AM ET, by Corey Rosenbloom

CME Group (CME) offered traders a breakout buy opportunity as the strong uptrend continued. Shares ...

Join Me Live Wednesday Morning for a Live Trading Challenge at the Money Show Las Vegas
Fri, May 8, 7:31 PM ET, by Corey Rosenbloom

I’m not quite sure what I got myself into but I eagerly accepted a challenge ...

Short Squeezed Bullish Surging Market Update and Big Stock Scan May 8
Fri, May 8, 2:11 PM ET, by Corey Rosenbloom

The trading range continued which meant that today’s session was another expected bullish surge up ...

Triple US Stock Market Index Chart and Level Update
Fri, May 8, 1:11 PM ET, by Corey Rosenbloom

This morning’s Jobs Report was the catalyst that continued the rally off support as price ...

Walmart WMT at Critical Support Pivot Planning
Thu, May 7, 3:11 PM ET, by Corey Rosenbloom

Wal-Mart is a component in the Dow Jones Index that is facing a critical support-test ...

Relief Rally Market Update and Big Stock Scan May 7
Thu, May 7, 2:31 PM ET, by Corey Rosenbloom

Surprisingly, the market is behaving normally at least in terms of efficient movement between – ...

May 6 Collapsing Stock Market Update and Big Trender Stock Scan
Wed, May 6, 2:51 PM ET, by Corey Rosenbloom

After an overnight bounce off daily support, sellers again dominated the market today, resulting in ...

May 5 There She Goes Market Liquidation Update and Bearish Stock Scan
Tue, May 5, 3:21 PM ET, by Corey Rosenbloom

With price doing exactly what it should be doing given the weakness and numerous divergences ...

Crude Oil Finally Breaks Through to Open Air Pocket
Tue, May 5, 11:21 AM ET, by Corey Rosenbloom

Crude Oil broke through a critical resistance cluster today triggering a breakout into “Open Air.” ...

Disney DIS Surprises with New Highs but Watch the Trap
Tue, May 5, 10:21 AM ET, by Corey Rosenbloom

Disney (DIS) – one of the strongest trending names in the Dow Jones Index – ...

John Carter's "How to Make Money in the Stock Market" Intro eBook
Mon, May 4, 7:41 PM ET, by Corey Rosenbloom

If you’re a brand new aspiring trader, or even an intermediate trader looking to refresh ...

John Carter's "Making Money in the Stock Market" Intro eBook
Mon, May 4, 7:31 PM ET, by Corey Rosenbloom

If you’re a brand new aspiring trader, or even an intermediate trader looking to refresh ...

May 4 Stock Scan and Neverending Bull Trend Market Update
Mon, May 4, 2:51 PM ET, by Corey Rosenbloom

Quick – let’s take a poll. When will this bull market end? Never? Good guess! ...

Essential Make or Break Level Brewing in Keurig Green Mountain Coffee GMCR
Mon, May 4, 1:41 PM ET, by Corey Rosenbloom

“Will it break or will it hold?” That is the key question facing traders as ...

Current Low Volatility Forecasting a High Volatility Future
Mon, May 4, 1:11 PM ET, by Corey Rosenbloom

If you’re finding the current low volatility environment boring or lackluster, wait a few more ...

Plotting and Planning the Next Swing Trade in Crude Oil
Sun, May 3, 2:11 PM ET, by Corey Rosenbloom

Crude Oil traded powerfully up to a known resistance target, and we’ll plan our next ...

Bull Trap Down to Support in Apple AAPL Trade Planning
Fri, May 1, 12:51 PM ET, by Corey Rosenbloom

Apple (AAPL), just like the broader S&P 500, snapped a Bull Trap on a failed ...

A Hideous Bull Trap Snaps Gold GLD Traders
Thu, Apr 30, 4:51 PM ET, by Corey Rosenbloom

If you’re trading Gold or the ETF GLD this week, you probably are suffering a ...

A Quick Level Planning SP500 Update on the Bull Trap Breakdown
Thu, Apr 30, 4:11 PM ET, by Corey Rosenbloom

Today’s Breakdown under support officially triggers a “Bull Trap” Outcome and tilts the market to ...

Bears Claim Victory Market Update and Trending Stock Scan to End April
Thu, Apr 30, 3:21 PM ET, by Corey Rosenbloom

I’m seeing bears celebrate today’s sell-swing but this is actually the most logical/expected outcome given ...

A Second V-Spike Reversal Day and Big Stock Scan GDP Fed April 29
Wed, Apr 29, 3:41 PM ET, by Corey Rosenbloom

US GDP, a Federal Reserve (FOMC) announcement, a Dollar breakdown, Twitter’s (TWTR) breakdown, a V-Spike ...

  More articles:  1 2 3 4 5 6 7 next »

ABOUT US »   ADVERTISE »   CONTACT US »   TERMS OF USE & PRIVACY POLICY »

Bullish Signs from the March 2012 Sector Rotation Model | Self Directed Investor | Copyright © 2008 - 2015, All Rights Reserved

Any ideas and opinions presented in Self Directed Investor content are for informational and educational purposes only, and do not reflect the opinions of BNK Invest, Inc. or any of its affiliates, subsidiaries or partners. In no way should any content contained herein be interpreted to represent trading or investment advice. None of the information contained herein constitutes a recommendation that any particular security, portfolio, transaction, or investment strategy is suitable for any specific person. All site visitors agree that under no circumstances will BNK Invest, Inc,. its subsidiaries, partners, officers, employees, affiliates, or agents be held liable for any loss or damage caused by your reliance on information obtained. Read Full Disclaimer.

SDI is associated with: ValueForum.com -- a subscription-based online social networking forum of serious individual investors. | MarketNewsVideo.com -- videos appearing on SDI are produced by Market News Video. | TickerTech.com -- stock quote content appearing on SDI is at least 20 minutes delayed and is powered by Ticker Technologies. | GoldStockStrategist.com -- Edited by Scott V. Nystrom, PhD, Gold Stock Strategist provides analysis on gold mining companies.