Sector Rotation and Getting Ready for UP moves

We are still in process of consolidation from all the down moves. We might see couple hundred points up and then couple hundred points down in upcoming days. We have to see the double bottom before I start believing in the start of bull rally.

This way I protect myself from getting whipsawed.

As promised last week, I am going to talk about sector rotation today.
From the below chart, you can see the performance of various sectors for last 65 days.
We can see that GOLD has been leader of the pack and held up very well during the market downturn. No. 2 is semiconductors.

Usually in a market rally, 3 sectors lead the rally pack, Technology, Financials and Transports.
From here we can see that Semiconductors are second ones in terms of Performance.
The key here to find few stocks in the Semiconductors pack.



From the below chart we can see how the performance of Semis have been as compared with $SPX. It has been rising steady so this gives us more confidence to get into the Semis.
The next post will be on how to find the market leaders in Semis or any other leading sectors.


$SOX:$SPX - Daily Candlesticks: "

Fake move up.. Tomorrow may sell off..

We had a mighty up move today, but based on the history, we had not seen the the RSI Weekly Dow and Weekly SPX go below 30 yet.

I am not going in with this move. If this move continues, it can go up to 20 Day MA and RSI will fight the 50 level. Usually when it does that, then after hitting 20 D MA, it sells off to new lows and then RSI can go below 30.

If we break 50 level on RSI and stay above 50 Level on RSI then we can have the bullish up move..

$INDU - Weekly Candlesticks: "

$INDU - Daily Candlesticks: "

$SPX - Weekly Candlesticks: "

via StockCharts.com

"

$SPX - Daily Candlesticks: "

via StockCharts.com

"

Back from Vacation - Waiting for Reversals

Sorry for my readers. I am now back from my vacation, will keep posting regularly.

As I analyze the markets, we are still in the deep pits.

Here is some of the stuff that I use for spotting reversals
Watch the weekly RSI (14 week setting). You can see from this chart that Dow Jones was showing up above 70 on Weekly RSI right from end of April. Around April 26, it went below 70 giving us the sell signal.

Now we are waiting for signal to go below 30 and then rise up from there. This should be watched along with RSI (14 day setting). Right now we are hovering over 30.62 on daily and 30.28 on weekly. Hopefully in next couple days, daily will dip below 30 and then go back down and then rise up again by end of the week. At that point in time, the Daily and weekly should be below 30 and trying to bounce back. That should indicate us a buy signal.

We are looking for that 5% to 20% bounce. So remain ready, keep the powder dry.

$INDU - Weekly Candlesticks: "

$INDU - Daily Candlesticks: "

via StockCharts.com

Will Post tonight or tomorrow HOW to FIND and SPOT REVERSAL LEADERS