Posts filed under ‘industrial sectors’

Trading or Investing in Sector Rotations

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)

Sector Rotation 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:

This is where day traders, swing traders and long-term investors get informed about major changes in supply and demand of institutional investors.

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

Industrial Sectro with NLT Top-Line Signals
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

Information Technology Sector

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

Information Technology Sector on NLT HF Chart

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


Sign up for NLT Alerts: Either for NLT Day Trader Alerts or NLT Stock Trader Alerts.

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,


September 6, 2014 at 3:47 pm Leave a comment