Chart of the Day – Sector, Style Rotation (or not)
I deliberately opened a can of worms this morning to establish the need and use of today’s ‘chart of the day’….. a chart you can plan on seeing on a fairly regular basis. The percentage-change chart below looks at the results of all the major groups going back to the March bottom. So that covers style and cap, but what about sectors? Connect on Facebook | Follow on Twitter That was the chart you saw back on the 15th. In other words, the leaders lead for months, and the losers lag for months. All of them are always in flux, but this simple chart lets me know what’s heating up or cooling off with just a glance. I could overlay sectors onto the chart as well, but then it would be a big mess…. Style and Market Cap Performance - 10/20/09
The initial reaction might just be to favor micro caps, and avoid large cap growth. Take a look, but then keep reading for some specific thoughts. In a nutshell, I do it visually. That’s actually not a bad interpretation, but what you can’t quite tell on the chart (but I can with my zoomed-in version) is that large-cap growth is starting to catch up with the other style/cap indices. In breaking them out like this, I have a very clear idea of what’s strong or weak. Likewise, large cap value is starting to drag. What I didn’t mention then that I’ll explain now is how I find the hot groups, and steer clear of the colder ones. Per this morning’s portfolio snapshot and update, I hope its clear that the right sector, style, and market cap allocation is a major part of our stock-picking strategy. too difficult to read. Obviously some arenas did better than others. What’s not as obvious (though I’ve observed this time and time again) is that the discernible disparities on these charts tend to last for a while. FreeTradePicks.com | Login | Get all our email updates here!