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Strategies & Market Trends : Sector Day Trading -- Ignore unavailable to you. Want to Upgrade?

To: steve goldman who wrote (58)	5/6/1998 12:35:00 PM
From: Robert Graham	Respond to 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

To: steve goldman who wrote (58)	5/17/1998 1:01:00 PM
From: Robert Graham	Respond to of 86

I imagine you are talking about splitting the leaders in an industry from the second tier stocks, right? Also do you think it would help the trader monitor the market if stocks were classified further? For example, there are some stocks that can be considered market leaders that many look at to determine the health of the market itself. Perhaps these are companies that the more conservative players invest in that everyone is familliar with, including foreign money. This can be stocks like GE which is part of the DJIA. Then there can be the sentiment driven stocks. This is the stock that can reflect the positive sentiment of the market or sector. I think SUNW may qualify for this. Just as industries have their secondaries, the market can too. Take IBM for instance. This is a "has been" market leader. But in the later stages of a bull market, money may be looking for a place to go in a very recognizable company. IBM can take on this role like I think it has been doing lately. So there are the "up and coming" high-flyers like DELL, there are the more mature growth companies that have a history of posting very good returns like INTC and MSFT, then there are the industry leaders of the past that are companies further down their growth curve but still very solid companies like TXN and IBM. Then there are the companies that have no leadership potential (perhaps sometime in the future) that see money by exhuberant market players in search of places to go. Many of the Internet stocks can be considered part of this group. I am suggesting each will have its time in the market, and when they do, this can reveal the character of the market in terms of sentiment, how far along the market is in the bull run, and even how prone the market is to a setback, or looking at the flip side of this, how strong the current bull uptrend is. Just some ideas. Bob Graham