Sunday, February 20, 2011

Sector analysis

Cycles keep topping (or so it seems) as they hit the time lines where tops should occur.  Yet, the market keeps advancing.  So what is going on?  Cycles seem to work reasonably well for individual issues, but not for the indexes.

With this in mind I decided to look at sectors.  Could this give us a clue as to what is happening underneath.  What appears to be happening is that we have a strength moving from one sector to another and this is pulling the market higher.  At some point his process should reverse.  For example in December retail and financials seemed to be leading the market.  Now it appears commodities, manufacturing, technology has taken the lead (with financials and retail lagging).   So we have a rolling advance.

I did forward projections on 12 sectors.  I appears some of the leading sectors are overdue a correction.  If my projections are right then it appears we should have a cluster of sectors bottoming in Mar/Apr. 

Here are the 12 sectors I did projections for:

If you examine these projections you will see that they are not projected all to bottom together over the next 4-5 months.  So just as we have had a rolling rally it appears chances are good we will not have a sudden and deep correction, but a rolling correction over the next 4-5 months.

Gl traders.  Do your own analysis.

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