Putting “Sector Rotation” into Context.
By Trading Analysis November 14th, 2019
While the market and many analysts have been overwhelmingly bearish, Todd Gordon and the team at TradingAnalysis have remained bullish on US equities, adding exposure along the way in both stock and stock option positions. We’ve since printed new all-time highs in the Nasdaq, and are now watching for a near-term corrective move lower.
This week on our Wednesday Elliott Wave YouTube Livestream we had the pleasure of chatting with Julius De Kempenar, the inventor of Relative Rotation Graphs (a technology we are continuing to implement here at Trading Analysis). In this clip, Julius notes a bullish sector rotation in progress. He identifies a shift in momentum with risk-off and defensive sectors moving into the lagging quadrant, as bullish and risk-on sectors start to rotate into the improving and leading category.
As you can see, Relative Rotation Graphs can be extremely useful for identifying key sector and trend reversals. We are continuing to implement this fantastic tool here at Trading Analysis, and our lead Research Director Terry Long has been spearheading this effort. Not only are we utilizing this technology to position in the options market, we are also using this data when constructing our long-term portfolio entries. Checkout this clip to see what Terry has been up to!
If you’ve been following our work, you’ll know the team at Trading Analysis has remained bullish throughout the summer. Is the future set in stone? Absolutely not. That said, when you combine all of the information you have at your disposal to make informed decision, your level of confidence rises as does your overall accuracy. This is exactly why we have opted to introduce the form of sector analysis as shown above, which is only helping confirm the already bullish technical picture that we’ve been painting via our view of the markets through the lense of the Elliott Wave Principle. We’ll be sure to update you as we continue to implement this fascinating tool!