Sector rotation
- Thread starter Peter2047
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RichKid
PlanYourTrade > TradeYourPlan
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Peter2047 said:
Hi Peter,
Welcome to the ASF!
My understanding is that in the stock market some sectors run hot while others cool, so if commodities/materials are about to run then the 'smart money' will start buying into it before the others do and will say sell out of, let's say, consumer discretionary stocks, for example (so that's rotating out of one sector and into another).
So they rotate from sector to sector, dumping one as it runs out of puff. Can happen in asset classes too, ie sell property at the end of its run and go into shares or re-weight with more shares as the stock market does better.
Why not google it or search ASF and let us know what you find?
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Hi Peter,
Welcome aboard.
Back in March, respected analyst Stan Weinstein was
talking about sector rotation on NBR ... as he was looking
for a top in US markets ..... his recommendations
are now directed towards defensive stocks.
Aerospace, pollution control, food, household products
are included in his defensive list, but NOT the home
builders, as they are considered well overbought, now.
In commodities, he said that he favoured buying silver,
instead of gold for greater upside potential.
You can find his transcript, at:
Click here for transcript .....
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happy days
yogi
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Hi,
Sector rotation is as the name suggests rotating your investment dollars through to the hot sectors of the economy. At different times, different sectors will be moving while others will be dropping or going sideways. So it is basically a market timing momentum strategy.
Jose from www.metastocktools.com has a sector plug in for Metastock if you have it. You can easily compare sector strengths against each other and even indices. Even the manual he has written is very good. I have not bought it yet but have investigated it a bit and will do so when time and business commitments permit.
fundadvice.com is one of my favourite sites and I believe that they still have some stuff on sector rotation as they manage a sector rotation system for their clients in the US. The best thing about the US market is that they have extremely low cost exchange traded funds (etfs) with sector etfs available. These are basically index funds that you can buy and sell like a stock through an online broker. Index funds and sector index funds are like the ASX200 for example. That is, all (or a very good representation in the case of some funds) of the stocks constituting the index or sector are bought and bundled together. So in the case of the ASX200 the top 200 stocks on the oz market make up the ASX200 etf.
The great thing is, for the price of online brokerage you can purchase a basket of stocks that represents the Financials sector, the Healthcare sector and so on. So if you have a good tool like Jose's to assist in the identification of hot sectors you have the basis of a very cheap and effective trading strategy. I really need to find some time to develop my ideas!
Any other questions let me know but those two sites will give you a good intro. http://www.cfoc.com.au/etfs.htm There is some etf and index info at this site.
Adam
Sector rotation is as the name suggests rotating your investment dollars through to the hot sectors of the economy. At different times, different sectors will be moving while others will be dropping or going sideways. So it is basically a market timing momentum strategy.
Jose from www.metastocktools.com has a sector plug in for Metastock if you have it. You can easily compare sector strengths against each other and even indices. Even the manual he has written is very good. I have not bought it yet but have investigated it a bit and will do so when time and business commitments permit.
fundadvice.com is one of my favourite sites and I believe that they still have some stuff on sector rotation as they manage a sector rotation system for their clients in the US. The best thing about the US market is that they have extremely low cost exchange traded funds (etfs) with sector etfs available. These are basically index funds that you can buy and sell like a stock through an online broker. Index funds and sector index funds are like the ASX200 for example. That is, all (or a very good representation in the case of some funds) of the stocks constituting the index or sector are bought and bundled together. So in the case of the ASX200 the top 200 stocks on the oz market make up the ASX200 etf.
The great thing is, for the price of online brokerage you can purchase a basket of stocks that represents the Financials sector, the Healthcare sector and so on. So if you have a good tool like Jose's to assist in the identification of hot sectors you have the basis of a very cheap and effective trading strategy. I really need to find some time to develop my ideas!
Any other questions let me know but those two sites will give you a good intro. http://www.cfoc.com.au/etfs.htm There is some etf and index info at this site.
Adam
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