Where is the money flowing now?

Sector rotation is one of my favourite “health check point” to guage where the money is flowing. If the market is up and up but if I am caught into wrong sector, I will not be able to take full advantage of the bull run. As Jim cramer always says, there is always a bull run, you need to find were it is.

In last 52wks, on average the markets have been on strong rock solid bull run. All the sectors have performed very well, all in double digits but Utilities did exceptionally well delivering over 30% returns. 2nd best performing market was Materials (+25%) followed by engery (+23%). Those are good results when you compare with Dow and S&P (~ +20%) and Nasdaq (~16%).

last-month.jpg  ytd-07.jpg last-5-days.jpg  yesterday.jpg   

Above charts display how sectors have been changing hands. A close look in periodic changes reveals at money flowing out of Utilities (-4.4%) while energy, industrial and materials are strengthening. Industrial sector, I perticulary like FWLT, JEC, KAMN, AH, TGI, FLR. My Favourites in Energy are- BRS, OIH, WHQ, ENG, RIG, DO etc.

Materials is another sector that I am looking at and my choices for long term plays are -Aluminium (CENX) and non-ferrous (MDM, CCJ, FCX, PCU). Though not so much as the above three, I also like transportation specially Tires (CTB) and Railroads (FLA, CP, TWI). Oils is expensive and I am sure Rail transportation might be getting cheaper.

Disclaimer: This is more of a big picture so please do you DD before diving into it.

Profitable trading, OptionPundit






3 responses to “Where is the money flowing now?”

  1. […] Sector rotation was something that I discussed first time here on May 27, 2007.  I talked about where money was flowing and also mentioned about 21 picks. It’s been roughly 7 weeks since then and I thought let’s review if my analysis was worthwhile and how did individual picks do. […]

  2. designcurve Avatar

    Hi OP,

    What software did you use to chart the sector components?


  3. OptionPundit Avatar

    It is part of OP’s toolbox and under the heading “The Big Picture” from Select sector SPDRs.



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