Sector Rotation

[trisuni]

Hello All,

Im new here and this is my first post so please go easy on me,

I started learning about trading a couple of months ago and have been playing with virtual accounts, I have little - no knowledge of shares apart from the couple of books I have read

Im trying to approach buying shares as if I was doing it for real,

I understand that you first decide at what stage the market/economy is at by using the sector rotation diagram,

The thing is the book I have gives the diagram of what sectors are likely to rise dependant on where they are in the cycle, however how do you determine where we are in the cycle?

Im guessing its also different for different exchanges ie would the ftse would be at one stage but the DOW at a different stage? is this correct

I know these are really begginner questions but we all start somewhere,

Also is this how you would approach it, decide what sectors are going to be hot, then look at the fundementals of the companies and then decide the enter and exit points for the stocks chosen using technical analysis??

any help would be great

 

[the blades]

Hello All,

Im new here and this is my first post so please go easy on me,

I started learning about trading a couple of months ago and have been playing with virtual accounts, I have little - no knowledge of shares apart from the couple of books I have read

Im trying to approach buying shares as if I was doing it for real,

I understand that you first decide at what stage the market/economy is at by using the sector rotation diagram,

The thing is the book I have gives the diagram of what sectors are likely to rise dependant on where they are in the cycle, however how do you determine where we are in the cycle?

Im guessing its also different for different exchanges ie would the ftse would be at one stage but the DOW at a different stage? is this correct

I know these are really begginner questions but we all start somewhere,

Also is this how you would approach it, decide what sectors are going to be hot, then look at the fundementals of the companies and then decide the enter and exit points for the stocks chosen using technical analysis??

any help would be great

Hello trisuni,

It seems that you're going to be taking a "fundamental" approach to investing. Most people on here will be traders and will not be too concerned with the stages of the economic cycle. But I could be (and probably am ) wrong.

My opinion FWIW - If you study the performances of the fund managers who use a fundamental approach, the vast majority fail to outperform their stated benchmarks. So even if you find your answer I'd suspect the value of the information you obtain is already priced into the stock. It would appear to be priced in, even before the "experts" find the answer.

Good luck anyway,
UTB

 

[dbphoenix]

Hello All,

Im new here and this is my first post so please go easy on me,

I started learning about trading a couple of months ago and have been playing with virtual accounts, I have little - no knowledge of shares apart from the couple of books I have read

Im trying to approach buying shares as if I was doing it for real,

I understand that you first decide at what stage the market/economy is at by using the sector rotation diagram,

The thing is the book I have gives the diagram of what sectors are likely to rise dependant on where they are in the cycle, however how do you determine where we are in the cycle?

Im guessing its also different for different exchanges ie would the ftse would be at one stage but the DOW at a different stage? is this correct

I know these are really begginner questions but we all start somewhere,

Also is this how you would approach it, decide what sectors are going to be hot, then look at the fundementals of the companies and then decide the enter and exit points for the stocks chosen using technical analysis??

any help would be great

How you use sector rotation depends in part on your timeframe and on whether you want to buy low and sell high or buy high and sell higher. Have you thought about this yet?

Db

 

[trisuni]

How you use sector rotation depends in part on your timeframe and on whether you want to buy low and sell high or buy high and sell higher. Have you thought about this yet?

Db

Hi Db

Yeah i have considered where and what i will trade,

I am just looking for a general strategy,

ie if a sector is currently in favour then i will look for breakouts etc in that sector and trade on higher highs

if I feel a sector is going to come into favour then i will look for stocks that are currently low that will be lifted when the market changes - this is all theory and I may well be way of the mark just tell me if I am

I guess what Im looking for in the end is a way to narrow down the types of stocks im going to research rather than just plucking any out of the air, isthis the way the majority do this or what other ways do people use?

also for refernece how long does the cycle last on average? what ways are there to find where we are in the cycle


thanks again

Tris

 

[dbphoenix]

Hi Db

Yeah i have considered where and what i will trade,

I am just looking for a general strategy,

ie if a sector is currently in favour then i will look for breakouts etc in that sector and trade on higher highs

if I feel a sector is going to come into favour then i will look for stocks that are currently low that will be lifted when the market changes - this is all theory and I may well be way of the mark just tell me if I am

I guess what Im looking for in the end is a way to narrow down the types of stocks im going to research rather than just plucking any out of the air, isthis the way the majority do this or what other ways do people use?

also for refernece how long does the cycle last on average? what ways are there to find where we are in the cycle


thanks again

Tris

None of the sectors are in trouble, so the issue of "coming into favor" may not be pertinent for a while. Go here

http://bigcharts.marketwatch.com/industry/bigcharts-com/

and look at the chart of each sector. For example, click Oil & Gas. When the next page loads, click the O&G chart. Select a 4yr timeframe and Draw. Do this for all the sectors to get a sense of how they compare. Or you can use XLB, XLE, etc as proxies for the sectors.

Once you've chosen your sector, check the charts of the industries that make up that sector, then the groups that make up that industry, and so on down to the individual stocks.

Or you can take the bottom-up approach and scan for bases, breakouts, MA crosses and so on for invidual stocks and check the group/industry/sector the stocks are in. If you'd rather scan for fundamentals, check, for example, reuters.com (http://www.investor.reuters.com/ScreenEntry.aspx?target=/screening).

 

[trisuni]

Hi Db

Thanks that is just what I need I see this is the one for the dow, is there one for the ftse??

Also I thought thatyou did a fundamental analysis and a technical analysis do some people do technical analysis alone? does this provide enough info in itself?

 

[dbphoenix]

I don't know if there's one for the FTSE or not, but you may want to consider trading the market that provides you with the most information.

As to whether you use FA or TA alone or in combination, that's up to you. What matters most is doing it well.