The serious private investor considers or follows Stock
Market Sector Rotations, where institutional money flows in or out of one
sector and either into another asset class: Commodities, Treasuries, Currencies
or into a different industrial sector.
Graph-1: Sector
Rotation in the Real Estate Sector (Home Builders)
The NeverLossTrading Top-Line Chart, from the left to the
right, shows an outflow of money, started with two strong sell signals on July
7, 2014. This price move brought the value of home builder stocks down by about
12% (framed in red). With a strong buy signal on August 8, 2014 an inflow of
money started the demand for home builder stocks increased the share value by 7%.
Reporting such sector rotations is part of the NeverLossTrading Alerts:
- Stock Trading Alerts (daily and hourly signals).
- Long-Term Investor Alerts (weekly and 4-hour signals).
- Day Trading Alerts (daily, 4-Hour, 1-hour, shorter-term signals).
Observed assets are: Stocks, stocks with favorable option setups,
Futures, FOREX.
How to segment the stock market and find sector rotations?
Stock market indexes are a great source for leading stocks
in industrial sectors:
The DOW considers 30 different industrial sectors. Each
sector is represented by one leading company. For trading or investing into sector
rotations the S&P 500 is the much better choice, best segmented into the
following:
Graph-2: Industrial Sectors
of the S&P 500: Share by Market Capitalization per Sector
Graph-2: Information Technology is the strongest S&P 500 sector, followed by Financials and Healthcare. If we put the two consumer sectors: Consumer Staples and Consumer Discretionary together, the consumer sector appears to be dominant. The last 10% of the sector representation is cut into smaller segments, allowing the investor to leverage on the impact of a bigger money inflow or outflow as shown in Graph-1.
If you knew about those sector rotations, how would you take
advantage of your knowledge?
As shown in Graph-1, sector rotations allow you to trade on
money outflow (downside) and money inflow (upside). Hence, you need to know how
to participate in both market directions: In case you are trading with an IRA
account or an account with less than $25,000 holdings (SEC regulation), you cannot
short stocks; however, you can use Put-Option strategies. Those strategies and
much more are taught in the NeverLossTrading
Mentorships, tailor made to your individual trading and investing needs.
Let us take a look, how the NeverLossTrading Alerts tell you
about sector rotations. For our examples, we are taking the Information
Technology Sector with NLT Top-Line and NLT HF-Signals.
Graph-3: Information
Technology with NLT Top-Line Signals July 15 – August 11, 2014
Graph Summary: At the blue buy- and the red sell-signal, the
target price is marked by a dot:
- On the buy signal, it took us seven bars to come to target.
- The sell signal took 5 days to come to target.
The average expected time per trade after a NLT signal was
confirmed is one to five bars, maximum 10 bars, independent from the time frame
you took your signal from.
NLT Top-Line is for the trader, who wants to trade at strong
supply/demand changes.
If you prefer to trade more frequently, NLT HF Stock Trading
and NLT HF Day Trading systems are for you, producing in average 3-5 times more
signals per time unit observed than NLT Top-Line.
Professional NLT traders like to combine the two systems for
the highest participation rate. In any case, we support you by publishing both
signals on our NLT Alerts and learn how to participate in sector rotations by
stock and option strategies, to leverage and protect trade positions.
In the following example, you find NLT HF-Signals in three
different colors:
- Dark-Green: Institutional triggered price-momentum change and statistical volatility increase.
- Light-Green: Volume differential change with price direction approximation.
- Pink-Signal: Potential top and bottom finder.
Graph-4: Information
Technology with NLT HF-Signals July 24 to August 22, 2014
If you want
to learn how to trade with institutional sector rotations, you have two
chances:
Schedule a
free consulting hour, where you can see our screens; we answer your questions
and propose the fitting NLT Mentorship to you:
Call: +1 866 455 4520
Or:
In case, none
of these solutions is for you at this time; however, you want to stay in touch
and receive free trading tips and market reports, sign up here:
Please always
consider the risk of trading and that past performance cannot be taken
indicative for future results.
Good trading,
Thomas
No comments:
Post a Comment