Sector Rotation is still in evidence between the energy (XLE) sector vs Tech (XLK) and Financials (XLF). Since January 01, 2022:
- The XLE has risen from $56.50 to $68.00.
- The XLK during the same time has fallen from a high of $176 to a low of $146 and very recently rebounded a bit.
- The XLF has come back to mostly flat.
Even though the market has been very choppy during this period, Sector Rotation can provide excellent setups provided you don’t chase already-extended stocks.
Focus Your Trading Strategy
Focus on stocks setting up with consolidations and at least two Big Money Footprints – including our Options Volatility Indicator (OVI) – in sectors that are moving.
XOM has been a great example of this strategy since late December, but is now quite extended. Also worth noting, not all stocks in a strong sector will perform the same, which is why you need to play each opportunity on its merits.