Learning to be a Trader

Monitoring the Market State

Bond Yield

Monitor the market flow of money, provide us a cue of the longer term market sentimental. Understanding if the market is fearful going into Flight-To-Safety, the mentality of risk going into a Flight-To-Quality.

The money going to & fro Bond Market takes time to move, takes time to affect (entry or exit) stock/bond market, therefore providing us a cue if the money is going into the stock market in 6-12months time, or has left the stock market.

Check bond yield historical data here.

Learn bond yield curve from animation chart.

Market Sector

Monitoring the performance of the market sector helps to provide a short term cue of the market sentimental, whether the market is defensive or aggressive.

The Market Sector to monitor are,

  • XLF, Financials (most aggressive)
  • IYW, Technology (aggressive)
  • XLY, Discretionary (aggressive)
  • XLB, Materials (aggressive)
  • XLI, Industrials (aggressive)
  • XLE, Energy (defensive)
  • XLP, Staples (defensive)
  • XLV, Health Care (defensive)
  • IYZ, Telecommunications (defensive)
  • XLU, Utilities (defensive)

Sector Rotation

Check out Trading Economics, to find out the current stage of the economics.

Check out the following,

  • Consumer Expectations
  • Industrial Production
  • Interest Rates
  • Yield Curve

to find out if the economic is in

  • Full Recession
  • Early Recovery
  • Full Recovery
  • Early Recession

from the stage of the economic, determine the money flow to the sectors

  • Cyclicals
  • Technology
  • Industrial
  • Basic Industry
  • Energy
  • Staples
  • Services
  • Utilities
  • Finance