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Created on: 1/14/2012 10:31:26 PM   Last Update: 1/14/2012 11:42:16 PM Posted by: RTT
WARNING: This entry is 4893 days old. It may contain broken links, out-dated or misleading content. Please read on with caution.

1 POST Sector trends reveal market strength
sector-trends-reveal-market-strengthSector relative strength easily shows up the wave strength behind the market. If you can judge what folks are buying you can determine the risk on or off mode of the market.

This sector rotation chart shows the stock market cycle and the economic cycle.

Sector Cycle



1) Stock market bull cycle favors SPDR sectors: Basic Materials(XLB), Industrials(XLI), Technology(XLK)

2) Stock market bear cycle favors SPDR sectors: Utilities(XLU), Consumer Staples(XLI), Health Care(XLV)

At readtheticker.com we have combined the above into two custom indexes: (1) RTT Product Index (@RTPRD) and (2) RTT Defensive Index (@RTDEF).

To determine the pure risk on or off market we divide @RTPRD by @RTDEF, or risk stocks with defensive stocks, and then review with basic technical analysis. Look out for higher highs, lower lows, divergences, etc.

For example, the SPY (SP500 Etf) sideways pattern during May 2011 was not likely to break out higher as folks brought more defense stocks versus risk stocks, and the SPY low of March 9 2009 was always going to reverse as folks starting to nibble at risk stocks (no new low with the @RTPRD/@RTDEF line).

Knowing if the true risk on or off market is active allows the investor to increase or decrease exposure to the market.

Sector rotation






Divider




NOTE: Posts here are the lite version, more depth on each subject can be found via our RTT Plus membership.

Changes in the world is the source of all market moves, to catch and ride the change we believe a combination of Gann Angles, Cycles, Wyckoff and Ney logic is the best way to ride the change, after all these methods have been used successfully for 70+ years. This post is a delayed and small sample of what is avaliable to members. Sign up to enjoy the full service.


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NOTE: readtheticker.com does allow users to load objects and text on charts, however some annotations are by a free third party image tool named Paint.net

Investing Quote...

...“It is impossible here to give an adequate idea of the Law of Vibration as I apply it to the markets. However, the lay man may be able to grasp some of the principles when I state that the Law of Vibration is the fundamental law upon which wireless telegraphy, wireless telephones and phonographs are based”...

William D Gann


..“It’s not what you own that will send you bust but what you owe.”..

Anon


.."Capitalism works better than it sounds, while socialism sounds better than it works"...


Richard Nixon

..“Because of the extreme challenge, one must commit full attention to it.” Market speculation is “no different than trying to be a successful doctor or lawyer … you simply must devote yourself full-time to the study of your craft”...

Bernard Baruch


.."Wall Street is the only place that people ride to in a Rolls Royce to get advice from those who take the subway"..

Warren Buffett




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We at readtheticker.com hold the view that a mix of stock chart technical analysis, Richard Wyckoff, William Gann and Jim Hurst methods plus market fundamentals allows the investor to formulate a very sound market opinion. These attributes are mutually inclusive and must be weighted equally before investing or trading in any Stock, ETF, Currency, Bond, Commodity, CFD or Mutual Fund



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