Trading With Indicators - How to Use Economic Cycles To Your Advantage

When you are trading with indicators, there are several things you should be looking at. Once of those things is sector rotations and the economic cycle changes.

If you want to get an understanding of these cycle changes and what they could mean for your trading, keep reading!

THE WEEK

We are witnessing a major sector rotation.  These rotations have an impact on my trading for a number of reasons.

Big money moves in and out of sectors depending on the perception of how well the economy is doing.            

Over the years I have watched and study these rotations.  I have written and had published a few articles on the subject.  Look at the picture below.  I have found sectors rotate as the economic cycle changes.  In February 2021 Bidden came out with his first economic policies.  I read the policy papers  thoroughly and my first thought was this is going to cause massive inflation and possibly a recession.  Go back and listen to the weekly webinars from that time period where I discussed ad nauseum my fears.  Unfortunately, my fears materialized and we have had a chaotic Market for almost two years.

Certain Sectors tend to get stronger with the rotations.   

I like to trade with the Market and the Sectors rather than use a contrarian approach. This is the key to trading with indicators. If I see a Market start to go up as I am now seeing, I looked for Tickers to trade in the Sectors which are also getting stronger.  Why fight the tide?       

Here is this week’s evaluation of the Market Sectors.  Notice where money is moving in and where money is moving out.  Then look at my drawing above and you will get an idea of how the economy is shaping up.

LOOKING AHEAD

I think we will see an up Market forming.  It will still be a little rough to trade as the uncertainty will linger.  But it will smooth out as confidence returns.  I am so looking forward to a nice BORING up Market after so much chaos.

HOW AM I DOING?

It was a good week with a 7.2% gain for the week for my DATA account.

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