Materials Select Sector SPDREducation
Sector Rotation Model in Tradingview
I have decoded the following model in Tradingview
https://www.tradingview.com/x/GdLQ9ADK/
This is the sector rotation model where different sectors are stronger at different points in the economic cycle.
Here my results in Tradingview by creating this ad-hoc layout
I compare relative strengths of sectors at different points in the economic cycle with sectors which are stronger at previous economic cycle.
- dark red zone = Full Recession
- light green zone = Early Recovery
- dark green zone = Full Recovery
- light red zone = Early Recession
Example: Industrial sectors is seen strong during the early recovery. I want to see it stronger than Tech sector (which is strong during full recession, the previous economic cycle ) for confirmation of the actual early recovery cycle actually priced by investors.
Adding 200-periods and 50-periods simple moving averages (SMA) for better defining the trend.
- chart above SMA50 and SMA200 = bullish = confirmation of the economic cycle
- chart under SMA50 and SMA200 = bearish = not a confirmation of the economic cycle
- chart under SMA50 or SMA200 = neutral = uncertainty, not a confirmation of the economic cycle.
What actually Mr. Market is pricing now?
How you can see in the figure above, we have more confirmations (V symbols) at recovery cycle. No confirmation at Full Recession and one only confirmation at the early recession.
Mr. Market does not want the recession yet…
https://www.tradingview.com/x/GdLQ9ADK/
This is the sector rotation model where different sectors are stronger at different points in the economic cycle.
Here my results in Tradingview by creating this ad-hoc layout
I compare relative strengths of sectors at different points in the economic cycle with sectors which are stronger at previous economic cycle.
- dark red zone = Full Recession
- light green zone = Early Recovery
- dark green zone = Full Recovery
- light red zone = Early Recession
Example: Industrial sectors is seen strong during the early recovery. I want to see it stronger than Tech sector (which is strong during full recession, the previous economic cycle ) for confirmation of the actual early recovery cycle actually priced by investors.
Adding 200-periods and 50-periods simple moving averages (SMA) for better defining the trend.
- chart above SMA50 and SMA200 = bullish = confirmation of the economic cycle
- chart under SMA50 and SMA200 = bearish = not a confirmation of the economic cycle
- chart under SMA50 or SMA200 = neutral = uncertainty, not a confirmation of the economic cycle.
What actually Mr. Market is pricing now?
How you can see in the figure above, we have more confirmations (V symbols) at recovery cycle. No confirmation at Full Recession and one only confirmation at the early recession.
Mr. Market does not want the recession yet…
Disclaimer
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