Tuesday, May 01, 2007

Chart Indices & Sectors








Sector Rotation chart-


Legend: Market Cycle | Economic Cycle

This theoretical model is based on Sam Stovall's S&P's Guide to Sector Rotation and states that different sectors are stronger at different points in the economic cycle. The graph above shows these relationships and the order in which the various sectors should get a boost from the economy. The Market Cycle preceeds the Economic Cycle because investors try to anticipate economic effects. The PerfChart at the top of this page tries to help you see this effect.

Stage:Full RecessionEarly RecoveryFull RecoveryEarly Recession
Consumer Expectations:RevivingRisingDecliningFalling Sharply
Industrial Production:Bottoming OutRisingFlatFalling
Interest Rates:FallingBottoming OutRising Rapidly (Fed)Peaking
Yield Curve:NormalNormal (Steep)Flattening OutFlat/Inverted

(Courtesy Stock Charts.com)

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