Don't Ignore This Chart!

Sector Rotation: The "Offense" Takes the Field

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We're finally back to seeing an "orderly" sector rotation situation on the 3-month S&P Sector PerfChart:

SectorsOct2013

The "offensive sectors" on the left of the chart are all positive while the "defensive sectors" are all now below zero.  Comparing this to the Sector Rotation Model (located at the bottom of the PerfChart page) shows that, if this pattern holds, this configuration is bullish for the market.

To recreate this chart, follow these steps:

  1. Click on the "S&P Sector PerfChart" link located in the middle of our homepage.
  2. Click on the "Show Histogram Chart" button located in the lower left corner of the chart.
  3. Right-click on the middle of the date slider in the lower right corner of the chart (where it says "200 days") and then select "Past Three Months" from the menu that appears
  4. Right-click in the middle of the chart itself, then select "Show Cycle Line" from the menu that appears.
  5. Click and drag the yellow cycle line until it is in position

Why three months?  John Murphy often says that 3 months (~60 trading days) is a good intermediate timeframe to use when looking for sector effects.  You can move/shrink/expand the date slider to see different time periods.

- Chip

Chip Anderson
About the author: is the founder and president of StockCharts.com. He founded the company after working as a Windows developer and corporate consultant at Microsoft from 1987 to 1997. Since 1999, Chip has guided the growth and development of StockCharts.com into a trusted financial enterprise and highly-valued resource in the industry. In this blog, Chip shares his tips and tricks on how to maximize the tools and resources available at StockCharts.com, and provides updates about new features or additions to the site. Learn More
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