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

June 28 Bounceback Emini Fibonacci Target Update
Tue, Jun 28, 11:41 AM ET, by Corey Rosenbloom

The Daily Chart traded all the way down to our 38.2% Fibonacci Target and bounced ...

Charting Risk On and Risk Off with Utilities XLU and Financials XLF
Mon, Jun 27, 1:11 PM ET, by Corey Rosenbloom

When we’re talking about “Risk-On” or “Risk-Off” Money Flow in the market, there’s many ways ...

Down Goes Delta DAL on Weekly Reversal
Mon, Jun 27, 11:21 AM ET, by Corey Rosenbloom

Delta Airlines (DAL) shares reversed their uptrend into a downtrend on the weekly frame as ...

Expanded Emini Fibonacci Grid after Crash June 27
Mon, Jun 27, 11:11 AM ET, by Corey Rosenbloom

The Brexit Fall-out continues in equity markets including our own S&P 500. Let’s expand our ...

Brexit Aftermath Market Update and Big Stock Scan June 24
Fri, Jun 24, 2:51 PM ET, by Corey Rosenbloom

Well that was surprising. I’ll leave the explanations for you to read elsewhere as we ...

Quick Quad Market Chart of First Brexit Reactions
Fri, Jun 24, 1:11 PM ET, by Corey Rosenbloom

If you’re like me, you’re surprised by the U.K. “Brexit” vote. ...

Even with the Brexit our Emini Fibonacci Levels Hold June 24
Fri, Jun 24, 12:51 PM ET, by Corey Rosenbloom

I think we can safely say most of us didn’t see THAT happening. By a ...

How to Use Our Daily Emini Fibonacci Planning Posts
Thu, Jun 23, 7:11 PM ET, by Corey Rosenbloom

Each morning I post a quick Fibonacci Target Grid for your reference. We use this ...

All is Saved Bullish Market Update and Stock Scan June 23
Thu, Jun 23, 3:51 PM ET, by Corey Rosenbloom

We’re all saved! The United Kingdom is expected to remain within the European Union, and ...

June 23 Bullish Breakout Emini Fibonacci Grid
Thu, Jun 23, 12:11 PM ET, by Corey Rosenbloom

With expectations that the U.K. will remain within the European Union, stock prices surged right ...

June 22 Intraday Reversal Market Update and Stock Scan
Wed, Jun 22, 1:51 PM ET, by Corey Rosenbloom

Price retested the 2,100 key level… but failed to hold it this afternoon. Let’s update ...

Breakout from Fibonacci Grid Emini Update June 22
Wed, Jun 22, 11:11 AM ET, by Corey Rosenbloom

While price bounced between our upper Fibonacci Grid Levels, this morning we’re seeing a possible ...

The Critical Support Breakdown Trading Level for GILD
Tue, Jun 21, 3:11 PM ET, by Corey Rosenbloom

If you’re trading – or thinking about trading – Gilead Sciences (GILD), take a look ...

Bouncing Between the Fibonacci Levels Emini Update June 21
Tue, Jun 21, 1:31 PM ET, by Corey Rosenbloom

Despite yesterday’s large bullish up-gap, price bounced between our Fibonacci Grid as seen below. Here’s ...

Big Bullish Surge Emini Fibonacci Level Update June 20
Mon, Jun 20, 12:11 PM ET, by Corey Rosenbloom

The bulls seized control over the weekend with a strong bullish gap up to our ...

A Gap Out and Breakdown for Google GOOGL
Fri, Jun 17, 3:11 PM ET, by Corey Rosenbloom

Google (GOOGL) shares broke to new swing lows today after a gap-down and strong sell-swing. ...

Shocking and Stellar Reversals Today in All Markets
Thu, Jun 16, 4:11 PM ET, by Corey Rosenbloom

I assume very few of us saw THAT coming! What began as strong pro-trending movements ...

The Recent Surge of Defensive Money into Bonds and Gold
Thu, Jun 16, 11:21 AM ET, by Corey Rosenbloom

If you’re only watching stocks, you’re likely missing a big surge of money flooding into ...

Falling Emini Fibonacci Targeting Update June 16
Thu, Jun 16, 11:11 AM ET, by Corey Rosenbloom

Look out below! Chair Yellen spooked the market and sellers collapsed price through two Emini ...

Fed Day Fibonacci Emini Planning Levels June 15
Wed, Jun 15, 2:11 PM ET, by Corey Rosenbloom

No surprise! The Federal Reserve didn’t raise interest rates today. As we see the programmatic ...

Pullback Planning for Amazon AMZN June 14
Tue, Jun 14, 11:21 AM ET, by Corey Rosenbloom

Have you updated your “Pullback Trading Plan” for Amazon (AMZN) if you’re currently trading it? ...

Seriously the Fibonacci Levels are Magic Emini Update June 14
Tue, Jun 14, 11:11 AM ET, by Corey Rosenbloom

In the membership and morning Emini Updates, we’ve been expecting a logical pullback to lower ...

Gold Surges toward Key Prior High Target
Mon, Jun 13, 1:11 PM ET, by Corey Rosenbloom

As I highlighted Friday, Gold was surging toward the $1,300 prior price high and key ...

More Magic Planning with Emini Fibonacci Target Update June 13
Mon, Jun 13, 12:21 PM ET, by Corey Rosenbloom

Like Friday’s morning bounce, we’re seeing our expected price swing play out to our lower ...

Dynamic Options Power-Packed Webinar Saturday
Fri, Jun 10, 7:21 PM ET, by Corey Rosenbloom

I’m excited about this one! John Carter and Chris Brecher will be enriching your education ...

Three Quick Cross-Market Reversals Today June 10
Fri, Jun 10, 3:31 PM ET, by Corey Rosenbloom

For short-term and intraday traders, three trend reversals occurred on the lower frames today. Let’s ...

June 10 Retracement to Target Market Update and Stock Scan
Fri, Jun 10, 1:51 PM ET, by Corey Rosenbloom

Retracement! Price fell down away from the 2,120 target as expected toward the 2,100 level ...

Like Magic our Emini Fibonacci Target Holds June 10
Fri, Jun 10, 11:51 AM ET, by Corey Rosenbloom

“Do you believe in magic?” Ok Fibonacci Levels aren’t magic but they’re certainly interesting when ...

Chipotle CMG Continues Downtrend to New Lows
Thu, Jun 9, 4:11 PM ET, by Corey Rosenbloom

What a difference a year makes! Chipotle’s (CMG) share price hovered under $800 per share ...

Retracement Begins June 9 Emini Update Levels
Thu, Jun 9, 12:11 PM ET, by Corey Rosenbloom

Our Triangle Breakout Plan described yesterday was successful! Price reversed and traded logically down away ...

A Triangle at the Highs Emini Update June 8
Wed, Jun 8, 1:41 PM ET, by Corey Rosenbloom

Breakout! Or at least a hold at yesterday’s breakout resistance. Price is forming a short-term ...

June 7 Breakout Reversal Market Update and Big Stock Scan
Tue, Jun 7, 3:31 PM ET, by Corey Rosenbloom

Price extended the breakout from Friday’s worse-than-expected Jobs Report (how’s that for logic?). Let’s update ...

Breakout Level Planning for SP500 and Dow Jones June 7
Tue, Jun 7, 11:41 AM ET, by Corey Rosenbloom

Here we go! Price is breaking through current resistance to levels not seen since 2015 ...

Emini Breakout Update and New Fibonacci Grid June 6
Mon, Jun 6, 12:51 PM ET, by Corey Rosenbloom

We have a new breakout to a swing high in the @ES! This means we’ll ...

Apple AAPL Trades Down Away from Resistance Target
Thu, Jun 2, 12:31 PM ET, by Corey Rosenbloom

After springing a Bear Trap and surging higher, Apple (AAPL) shares achieved a key target ...

Third Time Emini Reversing off Our Fibonacci Level June 2
Thu, Jun 2, 11:21 AM ET, by Corey Rosenbloom

Today marks the third time price traded down toward – then reversed up away from ...

Video: When to Take Profits and When to Hold On
Wed, Jun 1, 9:51 PM ET, by Corey Rosenbloom

When should we grab our profits and when should we hold on for a bigger ...

The Three SP500 Rectangles and How to Trade Them
Wed, Jun 1, 2:31 PM ET, by Corey Rosenbloom

As we begin June 2016, the S&P 500 has formed three clear Rectangles on the ...

Perfecting the Pullback Market Update and Stock Scan May 31
Tue, May 31, 2:51 PM ET, by Corey Rosenbloom

We were focusing closely on the 2,100 level in the S&P 500. With divergences this ...

Logical Pullback Emini Update May 31 with Targets
Tue, May 31, 12:21 PM ET, by Corey Rosenbloom

Last week’s bullish pre-holiday action is now giving way to a logical pullback against resistance. ...

Uptrending ULTA Breaks Strongly Higher May 27
Fri, May 27, 12:21 PM ET, by Corey Rosenbloom

“Strong Stocks Tend to get Stronger” and Ulta Salon (ULTA) – a stock you may ...

Two Rounded Arc Reversals in Gold May 27
Fri, May 27, 11:31 AM ET, by Corey Rosenbloom

Gold prices declined eight sessions in a row in a collapse from the $1,300 level ...

Final Fibonacci Flirting Holiday Edition Emini May 27
Fri, May 27, 11:21 AM ET, by Corey Rosenbloom

Our two days of strong bullish action and yesterday’s consolidation took us straight into our ...

Flirting with the Final Fibonacci Emini Update May 26
Thu, May 26, 11:51 AM ET, by Corey Rosenbloom

Our two days of strong bullish (including a short-squeeze) action took us straight into our ...

Distribution Trade Planning for Alibaba BABA
Wed, May 25, 2:11 PM ET, by Corey Rosenbloom

Is Alibaba (BABA) setting up another Distribution Arc or Sell-Swing Breakdown Pattern? Let’s view the ...

Zooming in on Bullish Trades in Bullish Amazon AMZN
Wed, May 25, 1:51 PM ET, by Corey Rosenbloom

How do we trade a bullish stock that’s breaking out? The easiest strategy is to ...

Breaking through Resistance Emini Fibonacci Grid Update May 25
Wed, May 25, 11:41 AM ET, by Corey Rosenbloom

That’s two days in a row of a bullish open with follow-through! Price gapped above ...

New Lows for Downtrending Twitter TWTR
Tue, May 24, 11:21 AM ET, by Corey Rosenbloom

“Stocks that are weak (downtrending) tend to get weaker (keep downtrending).” That quote is certainly ...

Breakout Bulls Emini Target Level Update May 24
Tue, May 24, 11:11 AM ET, by Corey Rosenbloom

What a start to this morning’s session! Price gapped above our Fibonacci “breakout” target and ...

May 23 Emini Update Bouncing Between the Fibonacci Levels
Mon, May 23, 11:21 AM ET, by Corey Rosenbloom

A narrow opening range contains the price movement of the @ES between two key Fibonacci ...

  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 - 2016, 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.