馃攳
Make Easy Money by Using This Free Sector Rotation Tool - YouTube
Channel: unknown
[0]
hello my friends i hope you're having a
[2]
good day
[3]
in this video i want to talk about
[5]
sector rotation
[7]
and specifically an excel tool that you
[9]
can use to identify the hot sectors
[12]
and therefore making more money so
[15]
without further ado
[16]
let's get started okay so based on
[19]
investopedia sector rotation is the
[22]
movement of money invested in
[24]
stocks from one industry to another as
[27]
investors and traders anticipate the
[30]
next
[30]
stage of the economic cycle when people
[33]
talk about the stock rotation
[35]
they usually talk about this diagram
[37]
basically you have two cycles
[39]
the economic and the market cycle using
[42]
the economic cycle
[44]
you can understand where the market is
[46]
so for example
[47]
in last year's covet crash the economy
[50]
was in recession
[51]
and that means that we were in this area
[54]
and it was best for you to buy
[55]
stocks in technology to make the most
[58]
profit
[59]
actually there is a really good youtube
[61]
video that explains
[63]
this cycle better than me i put the link
[65]
in the video description below
[67]
so please pause my video watch it and
[70]
then come back okay now that
[72]
you have a basic understanding of sector
[74]
rotation
[75]
let's talk about this graph just so you
[78]
know
[78]
this particular page of the stock charts
[81]
website is free
[82]
again all the links are in the video
[84]
description below
[86]
you can see in this chart that we have
[88]
four stages and each stage has its own
[90]
characteristics
[92]
so if you find the current consumer
[94]
expectations
[95]
the current industrial production the
[97]
current interest rate
[99]
and the current yield curve you might be
[101]
able to identify which
[102]
market stage we are in and therefore
[105]
identifying which sectors are best
[107]
to put your money in there are many
[110]
websites
[110]
that can give you the information you
[112]
need on these four lines
[114]
but let's say you did your research and
[116]
found that consumer expectations
[119]
are declining industrial production is
[121]
flat
[122]
the interest rate is rising rapidly and
[125]
the yield curve is flattening out
[127]
then you can say that we are in the full
[129]
recovery stage and the best
[131]
stocks to buy are energy materials and
[133]
consumer staples
[135]
but first of all that's too much of a
[137]
work and second
[138]
this is a great diagram but it only
[140]
gives you the big picture
[142]
if we scroll up you can see that there
[145]
are some stuff here that we haven't
[147]
talked about yet
[148]
this is called a perf chart this chart
[151]
basically shows you the performance of
[153]
the major
[154]
sectors etf and the spx on a specific
[158]
time period
[159]
as you might know we have 11 major
[161]
sectors
[162]
here you can see all of them with their
[165]
largest etf
[167]
also the spx is an index that shows
[170]
how the 500 largest companies are doing
[173]
in the stock market so you can think of
[176]
spx as the whole market condition and
[179]
these etfs
[180]
as the condition of the major 11 sectors
[184]
on the right this axis shows the
[186]
performance on the bottom you see a
[188]
slider
[189]
where you can change the time period and
[191]
on the top left you can see the period
[193]
where the data
[194]
is extracted from so for example in the
[197]
last two days
[198]
the real estate utilities and
[200]
discretionary sectors have had the best
[202]
performance
[203]
but in order to improve our
[205]
understanding let's make the
[206]
performances relative to
[208]
spx so i'm going to click on spx to make
[211]
all the numbers relative
[213]
okay so now you can see that it's easier
[216]
to understand
[217]
which sectors are having good
[218]
performance let's double click on the
[221]
slider and put 50 days
[223]
based on this picture from february 19
[226]
to april 30th relatively speaking the
[229]
real estate
[230]
financial utilities materials and
[233]
industrials have been the best sectors
[236]
let's scroll down
[237]
and look at this chart again and
[239]
identify where we are
[241]
so i'm going to mark all the hard
[242]
sectors based on the perth chart diagram
[245]
with 50 day time period that we just saw
[248]
and try to find which market state we
[250]
are in
[251]
as you can see it's hard to identify
[253]
which market stage we are in
[255]
like i said this graph is supposed to
[256]
give you the big picture
[258]
you can try different time periods and
[260]
you will come to my conclusion
[263]
but i want to show you a quick way to
[265]
identify whether we are in a bold or a
[267]
bear market
[268]
let's divide all these sectors into two
[271]
groups
[271]
the bulls and the bears and the energy
[274]
can act as the middle guy
[276]
so now let's see which group is
[278]
performing better over time
[280]
i'm going to keep clicking on here and
[282]
observe the changes
[283]
to see if any sides are performing
[285]
better but i don't see any overweight on
[288]
each side
[289]
now let's go back to march 2020 here you
[292]
can clearly see that the bulls had more
[294]
weight
[295]
and therefore we were in a bull market
[298]
overall this perf chart is a great tool
[300]
but problem is that i want something to
[303]
predict the future
[304]
some websites give you good information
[307]
on this
[308]
for example the zags research group
[310]
gives you the sector rankings
[312]
but i accidentally came with something
[314]
that is called relative rotation graph
[317]
basically it's the chart that shows you
[318]
the trend of a stock
[320]
it does it based on the relative
[322]
strength and price movement
[324]
on the x-axis you can see the rs ratio
[327]
and on the y-axis you can see the rs
[329]
momentum
[330]
don't worry you don't need to know what
[332]
rs ratio or rs momentum is
[335]
if we set 100 and 100 as the start point
[338]
of the y-axis and
[339]
x-axis we will get a graph with four
[342]
areas and based on the stock rs ratio
[345]
and rs momentum
[347]
this stock can fall into one of these
[349]
four areas
[350]
the top right area is where the stock is
[353]
bullish and the top left is where it is
[355]
bearish
[356]
if you're interested you can read this
[358]
article on stockcharts.com
[360]
now if we can get this chart for each of
[363]
the sector's etfs
[364]
the problem will be solved we can
[366]
predict the future and we know
[368]
where to put our money in great news is
[370]
that you can have this on the
[372]
stockcharts.com website
[374]
but this feature is only for the stock
[376]
charts premium user
[378]
i didn't have the subscription so i
[380]
decided to make something similar on the
[383]
exo
[383]
to do it i followed the instruction on
[386]
this website
[387]
you can go through it to understand how
[389]
to make the tool but i will be happy to
[392]
share mine with you
[393]
just put your email in the comment
[395]
section and i will send the tool to you
[398]
now let's look at the excel sheet i
[400]
developed based on the article
[402]
but before getting into that guys can i
[404]
ask you something
[406]
can you please help me to grow my
[407]
channel by subscribing to my channel
[410]
liking and putting a comment on this
[412]
video thank you
[414]
now let's dive into the exo on the
[417]
datasheet you can see
[418]
all the data i used to make the graph
[421]
first i imported the data for spy
[424]
and the other 11 sectors from
[426]
investing.com
[427]
i did this for all the days from january
[430]
4th
[431]
up to april 30th 2021 then here you can
[435]
see the calculations
[436]
you don't need to touch anything here in
[439]
this section you can find all the data i
[441]
used to make the graph
[443]
one important piece of the data is the
[445]
time period for which
[446]
you want the calculations to be think
[449]
about this as a moving averages
[451]
when we say 20 day moving average it
[454]
means that the calculated data
[456]
is based on the past 20 days this 20
[459]
days time period has the same concept as
[461]
moving averages
[463]
next i copied all the information in
[465]
this section to the graph sheet
[467]
but to make it simple i created this
[469]
drop down menu so it only shows the data
[472]
for one type of etf
[475]
so if you open the drop down menu and
[477]
choose for example
[478]
xlf you can see all the rs and rm data
[482]
related to
[483]
xlf or the financial sector
[486]
the first one on row 4 means that on the
[488]
april 30th
[490]
based on the past 20 days time period
[493]
the rs and autumn of the financial
[495]
sector was around
[498]
103.99 by the way these data are
[500]
normalized
[502]
so if we plot these data we will get
[504]
this graph
[506]
to read this graph properly you need to
[508]
identify the first point which is april
[510]
19th
[511]
right here then you need to know that
[513]
there is a cycle here
[515]
meaning that if an etf is bullish it
[518]
won't be bullish forever
[520]
at some point it starts weakening from
[522]
bullish to bearish
[524]
and then it goes through the full
[526]
bearish state
[528]
but it cannot be bearish forever at some
[530]
point it will
[531]
start to improve from bearish to bullish
[534]
and finally it gets back to its
[536]
bullish stage and this cycle repeats
[539]
so in our example you can see that this
[541]
etf on the 20-day time period
[543]
kind of followed the cycle rotation and
[546]
right now it is weakening from bullish
[548]
to bearish
[549]
same as a moving average concept if you
[551]
want to reduce
[552]
noise and errors you can simply increase
[555]
the 20 to let's say 40.
[557]
if you see n slash a that means that
[561]
there are not
[561]
enough past data to calculate the rs and
[564]
rm
[565]
for that specific date which are all the
[568]
days after april 21st in our example
[571]
but you can see that in the 40 days time
[573]
period the path
[575]
and this graph is much smoother now let
[578]
me put it back to the default 20 days
[580]
one thing i forgot to mention this graph
[583]
only shows 10 points and i have
[585]
highlighted those data that i used to
[587]
make the graph
[588]
feel free to make the graph with more
[590]
points but i found 10 points to be the
[592]
best
[593]
now the last thing that i want to talk
[595]
about is how to keep this excel up to
[598]
date
[598]
remember that the excel sheet that i
[600]
will email it to you is up to date
[603]
but after you get it from me you need to
[605]
keep it up to date if you want to use it
[607]
on a daily basis
[609]
first you need to import new data you
[611]
can simply add one draw or a couple of
[613]
rows here
[614]
depending on how many days you want to
[616]
add then you need to add your data
[618]
either manually or copy paste from
[620]
another source
[622]
i personally do this every day after the
[624]
market closes
[625]
by just typing the new numbers remember
[628]
that you need to do this after the
[629]
market is closed
[630]
so that the numbers won't change but if
[633]
you need data for many days you can
[635]
access the data on investing.com website
[638]
i will show you quickly how to download
[640]
the data
[641]
on the investing.com website you need to
[644]
first search the name of the etf
[646]
let's say xle and then you go to
[648]
historical data
[650]
and then you choose your timeline and
[651]
finally you download the data
[653]
once you have the data for all of the
[655]
etf and the spy
[657]
you just need to copy and paste them
[659]
here one by one
[661]
next you choose this line
[665]
and you drag all of it up please
[669]
remember that you can't
[670]
drag up the first column because excel
[673]
doesn't
[674]
know the stock market working days or at
[676]
least i don't know how to do that on
[678]
excel
[679]
so you would need to write the dates
[681]
manually
[683]
the last thing that you need to do is to
[685]
come to the graph tab add new rows here
[690]
[Music]
[693]
then you choose this line drag up
[698]
and you will get the new rs and rm
[701]
numbers for the new dates
[705]
but you also need to update your chart
[709]
so to do that you click on here
[712]
right click select data
[716]
edit and you click on the x values
[721]
you delete all this stuff here
[723]
[Music]
[725]
and you add your new data
[729]
and you do the same for the y values
[732]
[Music]
[737]
and you're done now before i finish
[740]
this video please understand that i'm
[742]
not a financial advisor
[744]
and this video is for entertainment
[746]
purpose only with that being said i hope
[748]
you found this video beneficial and i
[750]
will talk to you guys in my next video
[759]
you
Most Recent Videos:
You can go back to the homepage right here: Homepage