Business Cycle and Sector Rotation

Some business sectors perform better during certain stages of an economic cycle and some during others. To take advantage of these regularly occurring business and economic fluctuations, we need to know when a sector typically outperforms and when it underperforms. The Business Cycle model tells us when an industrial sector has a greater probability of outperforming the market. The sector rotation approach guides us in taking money out of underperforming sectors and putting it into outperforming sectors.

The Output Gap

The output gap represents the difference between the two measures of GDP – real and potential – in percentage terms. This measure turned negative in Q1 of 2008, and it stayed below zero until Q2 2017. The Real potential GDP is the CBO’s estimate of the output the economy would produce with a high use…

Real and Nominal Rates Of Interest

Interest rates have real implications in the investment world. So does the forecast about them; hence, it pays to understand the concept of interest rates. Three fundamental factors impact the interest rates: Supply – this is the funds available with the savers, primarily households Demand – the demand for funds by the businesses to finance…

Dollar Index Explained

The U.S. Dollar Index is a geometrically average of six currencies weighted against the U.S. dollar. The Federal Reserve created it in 1973, and the ICE USDX index is the trading vehicle. The index contains six currencies: the euro, Japanese yen, British pound, Canadian dollar, Swedish krona, and Swiss franc. The euro replaced five European…

Bollinger Band Basics

Senior Analyst Jeffrey Kennedy shows you how these volatility indicators support pattern recognition As a technical trader, are you able to view financial market fluctuations clearly and reliably? At Elliott Wave International, we hold that the Elliott Wave Principle is the most effective tool for analysis. Yet the Wave Principle works well with other technical…