Sector Rotation
> Sector Rotation Analysis
Analysis of the Stock Market Cycle
In the context of sector rotation analysis the
stock market cycle can be broken down into 4 key stages we can observe.
Within each stage of the stock market cycle the economy is
experiencing different rates of production growth, consumer
expectations, interest rates, and yield curve shapes.
By analyzing these economic indicators and grouping them by what we
expect to see in each business cycle, stage we can use them as clues to
identify what stage of the economic cycle we are facing, and more
importantly which sectors we should invest in now.
4 Basic Stages to the Stock Market Cycle
There
are four basic stages to a regular stock market cycle, and within
each stage of the cycle we have different levels and changes in
industrial production, consumer confidence, interest rates, and Gross
Domestic Production. Learning how to identify each
stages of the stock market cycle is critical to practicing sector
rotation analysis. Let's explore each stage of the stock
market cycle now.
Market Bottom Stage
 Click the chart for a larger
image of this stage of the stock market cycle. In this stage
the stock market is forming a bottom. Clear
economic signals are evident to follow on a fundamental basis at this
market cycle stage.
Position your portfolio by following these Sector
Rotation Strategies During a Market Bottom Stage.
Bull Market Stage
 Click the chart for a larger
image of this stage of the stock market cycle. In this stage
the stock market is forming a bull market. Clear
economic signals are evident to follow on a fundamental basis at this
market cycle stage.
Position your portfolio by following these Sector
Rotation Strategies During a Bull Market Stage.
Market Top Stage
 Click the chart for a larger
image of this stage of the stock market cycle. In this stage
the stock market is nearing a top. Clear
economic signals are evident to follow on a fundamental basis at this
market cycle stage.
Position your portfolio by following these Sector
Rotation Strategies During a Market Top Stage.
Bear Market Stage
Click the chart for a larger
image of this stage of the stock market cycle. In this stage
the stock market overall is declining. Clear
economic signals are evident to follow on a fundamental basis at this
market cycle stage.
Position your portfolio by following these Sector
Rotation Strategies During a Bear Market Stage.
Next up: The 11 Stock Sectors
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