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Daily Sector Rotation

I have been focusing on sector rotation looking at longer range days to weeks. However, I notice that there can be dramatic leading sector/industriy changes on a day to day basis. For example, yesterday the Bio tech group was leading the pack and today they are near the bottom. Even with great stocks as in Bio tech, being last daily, can really hurt your portfolio. Are there any indicators/hints the day before, that can give even an inkling as to what sectors will be dominant the next trading day ? If so, could positively impact our portfolios.


  • The most important factor in day to day performance is likely to be news - especially earnings reports, but also specific-industry related news that would help or hurt earnings - e.g. a spike in oil prices would depress the airlines (in normal times). Even so, earnings surprises matter most. If good earnings are anticipated, then the market will price that in, and the price change will be moderate the day of the announcement if the earnings are in line with expectations. If earnings surprise for better or worse, price changes can be dramatic. But surprise can't be anticipated - or else it wouldn't be a surprise. Sometimes there are hints on the chart in the days leading up to earnings, but you have to know what to look for, and you still don't really "know".

    It takes a lot of effort to keep up with earnings across many industries, even if you limit yourself to the biggest caps - the ones most likely to influence the etf price. I don't think its possible for an individual to do it, except maybe full time and with a lot of experience. Likewise with news - there's just too much of it.

    So, if you want to day trade stocks, just pick a few of the most liquid (you need high volume and very narrow spreads to day trade) and get to know them.

  • If Biotech were consistently last daily then it would be wise to look elsewhere. I don't believe that daily industry or sector movements can be profitably exploited with any consistency using an indicator from the day before. All it takes is a few mis-steps to have you 2nd guessing the approach and then abandoning it entirely after a bad week or two.

    Being undisciplined can really impact our portfolios.

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