Let's talk about economy cycles. As we all know, business have 2 main stages; Expansion and Contraction. Normally, Expansion will last about 36 months while Contraction last about 18 months. Well, you easily compare side-by-side between business cycle and stock market because they are a replica of each others; just the main street (business) behind wall street (stock market) about 6 months.
Each sector are strong in different phases of the cycle. Let's explain more .... About Sector Rotation.
Early Bull - Transportation (Airlines, Railroads and Trucking) and Technology (Software, Hardware, Box Makers)
Middle Bull - Capital Goods (Manufacturing equipment)
Late Bull - Basic Materials (Aluminum, Copper, Steel, Chemicals, Paper)
Top Bull - Energy (Oil, Oil Services, Coal, Natural Gas)
Early Bear - Defensives (Non-Cyclicals) like Health Care and Consumer Staple (Food, Beverages, Drugs, Cosmetics, Tobacco)
Middle Bear - Utilities (Electricity, Gas)
Late Bear - Consumer Cyclicals like Housing and Autos
Bottom Bear - Financial Sector
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