Sector rotation alerts

Sector rotation is the slow background movement of capital between sectors of the economy as the market repositions for changing conditions. Catching the rotation early — before it's obvious — is one of the more durable edges in macro trading. Tickerbot watches the relative strength of every sector ETF continuously.

What rotation looks like

Rotation usually happens at inflection points in the macro cycle. Money flows out of sectors that have been leading and into sectors that have been lagging. The shift can be subtle for weeks before it becomes obvious. By the time financial media starts reporting on it, much of the move has already happened.

Tickerbot tracks the relative strength of the major sector ETFs against the S&P 500 (and against each other) on a rolling basis. When the relative strength rankings shift — when a sector that was lagging starts leading, or vice versa — the rotation alert fires.

The sectors Tickerbot watches

The major US sector ETFs Tickerbot tracks for rotation purposes:

• XLK — Technology
• XLF — Financials
• XLE — Energy
• XLV — Healthcare
• XLY — Consumer Discretionary
• XLP — Consumer Staples
• XLI — Industrials
• XLU — Utilities
• XLB — Materials
• XLRE — Real Estate
• XLC — Communication Services

Specific rotation patterns

Some rotations have specific names because they recur. "Risk-on" rotations move money into XLK and XLY. "Defensive" rotations move it into XLU and XLP. "Reflation" trades push capital into XLE and XLB. You can write alerts for any of them.

Variants worth setting up

• Risk-on rotation — XLK and XLY both leading
• Energy reflation trade — XLE leading on rising oil prices
• Banks-on-rates trade — XLF leading when the 10-year yield is rising
• Sector ETF golden crosses (the 50-day above the 200-day on any sector)