15
SECTOR ROTATION
SECTOR ROTATION
Definition
bull Sector rotation is an investment strategy involving the movement of money from one industry sector to another in an attempt to beat the market based on economic cycles
bull Using sector rotationndash Must know where you are in the economic cylce via
data
ndash The NBER usually calls recession and recovery after the fact
bull The stock market movement precedes the economic cycle by 6 to 12 months
NBERA recession is a significant decline in economic activity spread across the economy lasting more than a few months normally visible in production employment real income and other indicators A recession begins when the economy reaches a peak of activity and ends when the economy reaches its trough Between trough and peak the economy is in an expansion
LEADING INDICATORS
PERFORMANCE COMPARISON
2010
bull Based on Sector Rotationndash Continuation of technology amp cyclicalsndash Rotating towards industrial material and
energy
bull Based on PE relative ratios
bull Based on which sector is still most off from its high
2010 RISKSbull The market does not go straight up
ndash Some type of correction
bull US economyndash Inflation needs to remain in checkndash Unemployment eventually must declinendash Consumer and business spending
bull World economiesndash China ndash growth or brink of crackndash Debt issues around the worldndash Currency issues
412
799
1944
3812
Resources
bull httpwwwbriefingcominvestorpubliccalendarseconomiccalendarhtm
bull httpresearchstlouisfedorgpublicationsmt
bull httpstockchartscomchartsperformanceperfhtml[SECT]
bull Finvizcom
Definition
bull Sector rotation is an investment strategy involving the movement of money from one industry sector to another in an attempt to beat the market based on economic cycles
bull Using sector rotationndash Must know where you are in the economic cylce via
data
ndash The NBER usually calls recession and recovery after the fact
bull The stock market movement precedes the economic cycle by 6 to 12 months
NBERA recession is a significant decline in economic activity spread across the economy lasting more than a few months normally visible in production employment real income and other indicators A recession begins when the economy reaches a peak of activity and ends when the economy reaches its trough Between trough and peak the economy is in an expansion
LEADING INDICATORS
PERFORMANCE COMPARISON
2010
bull Based on Sector Rotationndash Continuation of technology amp cyclicalsndash Rotating towards industrial material and
energy
bull Based on PE relative ratios
bull Based on which sector is still most off from its high
2010 RISKSbull The market does not go straight up
ndash Some type of correction
bull US economyndash Inflation needs to remain in checkndash Unemployment eventually must declinendash Consumer and business spending
bull World economiesndash China ndash growth or brink of crackndash Debt issues around the worldndash Currency issues
412
799
1944
3812
Resources
bull httpwwwbriefingcominvestorpubliccalendarseconomiccalendarhtm
bull httpresearchstlouisfedorgpublicationsmt
bull httpstockchartscomchartsperformanceperfhtml[SECT]
bull Finvizcom
NBERA recession is a significant decline in economic activity spread across the economy lasting more than a few months normally visible in production employment real income and other indicators A recession begins when the economy reaches a peak of activity and ends when the economy reaches its trough Between trough and peak the economy is in an expansion
LEADING INDICATORS
PERFORMANCE COMPARISON
2010
bull Based on Sector Rotationndash Continuation of technology amp cyclicalsndash Rotating towards industrial material and
energy
bull Based on PE relative ratios
bull Based on which sector is still most off from its high
2010 RISKSbull The market does not go straight up
ndash Some type of correction
bull US economyndash Inflation needs to remain in checkndash Unemployment eventually must declinendash Consumer and business spending
bull World economiesndash China ndash growth or brink of crackndash Debt issues around the worldndash Currency issues
412
799
1944
3812
Resources
bull httpwwwbriefingcominvestorpubliccalendarseconomiccalendarhtm
bull httpresearchstlouisfedorgpublicationsmt
bull httpstockchartscomchartsperformanceperfhtml[SECT]
bull Finvizcom
LEADING INDICATORS
PERFORMANCE COMPARISON
2010
bull Based on Sector Rotationndash Continuation of technology amp cyclicalsndash Rotating towards industrial material and
energy
bull Based on PE relative ratios
bull Based on which sector is still most off from its high
2010 RISKSbull The market does not go straight up
ndash Some type of correction
bull US economyndash Inflation needs to remain in checkndash Unemployment eventually must declinendash Consumer and business spending
bull World economiesndash China ndash growth or brink of crackndash Debt issues around the worldndash Currency issues
412
799
1944
3812
Resources
bull httpwwwbriefingcominvestorpubliccalendarseconomiccalendarhtm
bull httpresearchstlouisfedorgpublicationsmt
bull httpstockchartscomchartsperformanceperfhtml[SECT]
bull Finvizcom
PERFORMANCE COMPARISON
2010
bull Based on Sector Rotationndash Continuation of technology amp cyclicalsndash Rotating towards industrial material and
energy
bull Based on PE relative ratios
bull Based on which sector is still most off from its high
2010 RISKSbull The market does not go straight up
ndash Some type of correction
bull US economyndash Inflation needs to remain in checkndash Unemployment eventually must declinendash Consumer and business spending
bull World economiesndash China ndash growth or brink of crackndash Debt issues around the worldndash Currency issues
412
799
1944
3812
Resources
bull httpwwwbriefingcominvestorpubliccalendarseconomiccalendarhtm
bull httpresearchstlouisfedorgpublicationsmt
bull httpstockchartscomchartsperformanceperfhtml[SECT]
bull Finvizcom
2010
bull Based on Sector Rotationndash Continuation of technology amp cyclicalsndash Rotating towards industrial material and
energy
bull Based on PE relative ratios
bull Based on which sector is still most off from its high
2010 RISKSbull The market does not go straight up
ndash Some type of correction
bull US economyndash Inflation needs to remain in checkndash Unemployment eventually must declinendash Consumer and business spending
bull World economiesndash China ndash growth or brink of crackndash Debt issues around the worldndash Currency issues
412
799
1944
3812
Resources
bull httpwwwbriefingcominvestorpubliccalendarseconomiccalendarhtm
bull httpresearchstlouisfedorgpublicationsmt
bull httpstockchartscomchartsperformanceperfhtml[SECT]
bull Finvizcom
2010 RISKSbull The market does not go straight up
ndash Some type of correction
bull US economyndash Inflation needs to remain in checkndash Unemployment eventually must declinendash Consumer and business spending
bull World economiesndash China ndash growth or brink of crackndash Debt issues around the worldndash Currency issues
412
799
1944
3812
Resources
bull httpwwwbriefingcominvestorpubliccalendarseconomiccalendarhtm
bull httpresearchstlouisfedorgpublicationsmt
bull httpstockchartscomchartsperformanceperfhtml[SECT]
bull Finvizcom
412
799
1944
3812
Resources
bull httpwwwbriefingcominvestorpubliccalendarseconomiccalendarhtm
bull httpresearchstlouisfedorgpublicationsmt
bull httpstockchartscomchartsperformanceperfhtml[SECT]
bull Finvizcom
Resources
bull httpwwwbriefingcominvestorpubliccalendarseconomiccalendarhtm
bull httpresearchstlouisfedorgpublicationsmt
bull httpstockchartscomchartsperformanceperfhtml[SECT]
bull Finvizcom
