Trust Your Advisor

The NASDAQ 100, which is tracked buy the Exchange Traded Fund symbol QQQ, hit an all-time high at 303.50 on September 2nd. Since then it has declined 11% as of Friday’s close. The run up to the highs was very strong. But what happens now?

What Is Sector Rotation and Style Rotation?

As explained on Investopedia.com: “Sector rotation is the movement of money invested in stocks from one industry to another as investors and traders anticipate the next stage of the economic cycle. Various sectors, or industries… thrive or languish depending on the cycle.” One can find charts on the internet that show sector rotations during economic cycles. Some Traders believe the economy moves in reasonably predictable cycles. The major sectors are Finance, Technology, Consumer Discretionary, Industrials, Materials, Energy, Consumer Staples, Health Care, Utilities, Metals and Mining, Biotech, Telecom, Home Construction, Retail and Real Estate. Style Rotation is comparable Sector rotation. Style Rotation is based on a company’s Market Capitalization. It is based on Mega Cap, Large Cap, Mid-Cap, Small Cap and Micro-Cap companies. Many traders follow both Sector and Style rotation.