Sector Rotation Shows Defensiveness

Bycjrosen November 10, 2007

The implications from Sector Rotation Theory are showing more bearish/defensive themes are occurring with money flow across the nine major US Sectors.

Over the last 65 days, energy prices led the charge with the greatest sector percentage increase, and we are seeing significant strength as well in the usually dormant utilities sector. Consumer staples (a defensive area) and Healthcare (also defensive) are showing initial signs of strength.

Think of the above chart in terms of left to right progression or flow of funds/money from one sector to the next from left to right.

The bulk of the flow is still centered in the Materials and Energy sectors, with early strength (and opportunities for profit) occurring in the traditionally more defensive sectors (where the “big funds” rotate to preserve capital, rather than earn massive amounts of capital).

As is true with Sector Rotation Theory, there are certain sectors, usually those ‘out of favor’ in terms of the cycle that are experiencing significant ‘outflows’ of cash. At this time, these sectors are the Financials (worst performing sector) and the Consumer Discretionary (retail, entertainment) etc. Taken alone, these developments are quite bearish for the overall market as a whole.

As a refresher, here is the basic progression of “Sector Rotation Theory” as detailed briefly on StockCharts.com:

I have added a red rectangle indicating the possible current location in the market cycle, which corresponds with the “Market Top” location.

Insights from Sector Rotation are somewhat complex, but well worth the effort to study the implications of the theory.

Daily Commentary | Weekly Commentary

Comparing May 6 to 1987 Crash Intraday

Bycjrosen May 7, 2010

We’ve already heard comparisons in terms of the fear, panic, confusion, and volatility of May 6, 2010 to October 19, 1987, so let’s look at the pure price charts to see if the comparison extends beyond that.

First, a look at the daily S&P 500 chart of the run-up then crash of 1987:

Weekly Commentary

Commodities Loved the Fed Rate Cut

Bycjrosen September 30, 2007

There is a bit of ominous information for the Stock Market in terms of the recent non-stop rally in the $CRB Commodities Index that occurred both before and after the September 18th US Federal Reserve rate cut. The Federal Reserve is vigilant in its campaign against inflation, and rising commodities prices are often used as…

Weekly Commentary

Weekly View of the Indexes

Bycjrosen June 3, 2007

Here are basic weekly charts of the major indexes at a glance: With the exception of the Nasdaq, the Dow and S&P 500 are making new momentum highs confirmed by new price highs – a good picture. The technology focused Nasdaq is forming a weekly momentum divergence with price, in terms of swing highs –…

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XLP Consumer Staples Nearing All Time High

Bycjrosen April 6, 2010

File this under “In case you missed it,” the XLP Consumer Staples ETF is knocking on resistance that – if broken – would result in an all-time price high (not just new bear market recovery high).

Surprised? So was I (especially if you don’t watch this fund actively).

Weekly Commentary

Intermarket Returns YTD Plus Comparison Graphs

Bycjrosen August 13, 2009

Let’s take a quick look at how various intermarket asset classes have performed year to date as we’re halfway through August 2009. Specifically, let’s compare the S&P 500 and the NASDAQ with the CRB (Commodity Index) along with Gold and Crude Oil and finally the 10-Year Note prices.

Daily Commentary | Weekly Commentary

Triple Timeframe View of CSCO Fall into Support

Bycjrosen November 11, 2010

While a one-day move greater than 10% is stellar for any stock, especially one as watched/traded as Cisco Systems (CSCO), let’s take a look at the bigger picture and journey from the monthly chart down to the daily frame to put this overnight move into a broader context. First, CSCO’s Monthy Structure: In the grand…

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