Current Stage in Sector RotationSector rotation is important to gauge the current economical strength that we're in.
This is the 60 day sector rotation summary. (180 day also looks pretty much the same.)
It's very clear that we're in a bear market right now, which doesn't happen often (1-2 every decade)
You can clearly see that that Discretionary / Tech / Industrials / Materials, are all going down where Energy / Staples / Healthcare / Utilities / Financials are going up.
Also, looking at precious metals (not on the charts) you'll notice that gold and silver are breaking out of their flags.
Always look at these 2 charts every couple months to detect where we stand in our economy.
So what now? Cash is king, raise as much as as you can. There's a strong possibility that we might enter a recession, many variables play in this as war tensions from Russia/Ukraine, and China/Taiwan seem real. And the fact that inflation is high and the fed will increase rates faster than we thought.
Sectorrotation
Sector Rotation March 2021Recent market sector rotation coming out of the COVID crash has confirmed Sector Rotation theory. I made this video to give viewers a brief introduction to the theory and provide some actionable investing ideas based on what Sector Rotation suggests will be the next stocks to potentially outperform.
Sector Rotation theory suggests that from market bottoms the two sectors that should lead are Consumer Discretionary and Technology. These two sectors did in fact lead the market out of the COVID crash. The next sectors to lead as the market matures are Industrials and Materials. These too followed the theory through 2020 as the bull market grew. At the market top Energy is supposed to lead and sure enough we have seen quite the run on Energy related stocks. What that means going forward if the theory holds is that Consumer Staples and Healthcare should outperform the market.
SICK sector rotations to defensive stocks for US stock market!I posted so much less stock ideas this quarter as generally I like to long stock that I'm willing to invest, and look for bullish set-ups.
While even I'm still bullish in so many names, but there aren't so many bullish set-ups in this market.
Wait a minute, defensive stocks are big exceptions and perfect choice for bottom-up strategy recently, and it's more than reasonable!
KO
PG
MCD
YUM
COST
and other classic defensive names like VZ, JNJ, MRK, PEP all showed great relative strength than the market!
(T is the lagger though)
That is, P/E ratio for tech stocks encounters huge corrections and the money come out of them just ran into these defensive stocks.
U.S stock market is still the top choice as there aren't many better alternatives.
While, investors tend to turn money into defensive stocks to fight for fluctuations.
In conclusion, it's still far from a financial crisis and it's still not too late to look for long opportunities in this sector!
Let's see how it goes!