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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Challo Jeregy who wrote (4380)	8/21/2001 4:12:00 PM
From: John Pitera	Read Replies (1) \| Respond to of 33421

Hi Challo, both are good charts. The Sector Rotation chart addresses the phasing of the economic cycle , the stock market cycle (and how the different sectors act during an idealized complete cycle). the relationships do not always follow one another in a totally uniform fashion, and also the magnitude of the up and down moves can differ, from sector to sector and economic cycle to economic cycle. The energy sector and the economy reacted differently in the oil spikes of the 1970's, as contrasted with the crude oil run up in 1996-1997. The overall stock market sector performance and economic performance was definitely much better in 96-97. with respect to the intermarket question of USDollar performance this year, many were thinking that the US Dollar would weaken several months prior to the top we made in July. The reason for the weakening would be lower US interest rates reducing the interest rate differential, as well as a slowing economy with less growth would have less overseas investment in it. you'll notice that the Murphy chart is using the 30 year bond yield, and I do want to point out that there has been diverging performance between the 10 year and 30 year yield benchmarks the past year or two. the 30 year bond has been back and forth from discount to premium in relationship to the 10 year note, which is now the accepted benchmark. The Open interest in the 10 year note futures on the CBT have been greater the past year, reflecting this benchmark shift. Also the chart focuses on the SPX, and as we know the action of the NASD and the SPX has not traded in lockstep the past few years, and yet the NASD bubble and crash has had a big impact on US and global Macro environment. I may have missed part of the concept you wanted me to look at, if so maybe we can take another look at it. John