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Strategies & Market Trends : Sector Day Trading
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To: steve goldman who wrote (58)5/6/1998 12:35:00 PM
From: Robert Graham   of 86
 
There are a couple areas about sectors in how they trade on a day to day basis. One area is what I heard referred to as intrasector rotation. This is where there are groups of stocks that traders periodically rotate between within the same sector. I suspect this is the "sector splitting" that has been mentioned here. Another area of interest is when I see different industries trade on up days compared to down market days.

Can anyone here give me an understanding on what is actually happening in these two area of sector trading?

Also I have seen money movement with respect to different "classes" of stocks, like the industry leaders and second tier stocks, for instance. For example, the funds right before the market adjustment were moving their money into what appeared to be second tier stocks in the high-tech sector: stocks like HWP and to some extent IBM for instance instead of the industry leaders MSFT and INTC. The funds apparently were looking for relative value. Further examples of this is where CPQ provided that due to a sell off over its aquisition of DEC. GTW since this stock has lagged behind DELL even though GTW is a fundamentally sound company that is compeating effectively in the same industry, and other stocks. Conceptually, I can see where after a previous run up of a sector lead by its industry leaders, relative value may be found with the secondaries. However, the public money was moving into the industry leaders at the same time like INTC and MSFT. I wonder if the "sector splitting" would be worthwhile in recognizing this type of distinction between the industry leaders and the secondary stocks. I also see the second tier stocks have many companies that at one time was considered a leader of its industry. They are solid companies that are further along in their growth curve where they do not show the world beating figures they once did, but still can be pretty respectable.

Have others here noticed any of the above phenomena? Any comments or feedback?

Bob Graham
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