The Cyclicals Are Back in Favor

8 days ago
2 Min Read
334 Words

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Today, Moderna said its COVID-19 vaccine appears to be 94.5% effective. The news is on the heels Pfizer Inc. announcing its own COVID-19 vaccine appearing to be similarly effective. Despite the wave of new COVID-19 cases and deaths, these results are encouraging as it shows promise of things potentially getting back to normal sometime next year.

Sector rotation is the action of shifting investment assets from one sector to another to take advantage of cyclical trends in the overall economy in an attempt to beat the market. Sector rotation seeks to capitalize on the theory that not all sectors of the economy perform well at the same time because sectors of the stock market perform differently during the phases of the economic and market cycle.

https://apnews.com/article/2nd-virus-vaccine-success-us-tests-5575a8a8ca3825a9bf39a5d234aba07b

https://www.marketwatch.com/story/these-money-and-investing-tips-can-help-you-set-up-for-the-stock-markets-great-rotation-to-value-from-growth-2020-11-14?siteid=yhoof2

https://leofinance.io/hive-167922/@rollandthomas/spdr-sector-relative-strength-analysis-report-for-week-starting-11-16-20

MY TRADING METHODOLOGY IN A NUTSHELL BELOW

I’m a supply and demand trader. The premise of supply and demand trading is when the market makes a sharp move up or down the large institutions i.e banks/hedge funds are not able to get their entire trade placed into the market, leaving pending orders to buy or sell at the zone with the expectation the market will return to the zone and the rest of their trading position will be filled.

I use multiple time frame (MTF) analysis to improve my discretionary trading decisions. MTF analysis involves analyzing the same asset on multiple time frames. The rule of thumb when using MFT is you want your charts to scale down/up by 4X – 6X. In my case I tend to look at:

Monthly Charts (curve time frame) – which represents that jet fighter flying over the football stadium.
Weekly Charts (trend time frame) – which represents the concession stands looking down at the field.
Daily Charts (entry time frame) – which represents being on the football field with the player.
4 Hr Charts (entry time frame) – which represents the center hiking the ball to the quarterback.


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