Simple Sector

Trading StrategiesProfit by being in the right markets – at the right time

JOHN MURPHY

7700++ DDVVDD’’ss FFOORR SSAALLEE && EEXXCCHHAANNGGEE

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SSkkyyppee:: aannddrreeyybbbbrrvv

Outline:

Slide 1: INTERMARKET OVERVIEW

Slide 2 - 3: COMMODITIES VS. BONDS

Slide 4 - 5: COMMODITIES VS. STOCKS

Slide 6 - 7: BONDS VS. STOCKS

Slide 8: DOLLAR VS. STOCKS

Slide 9 - 10: STOCKS VS. GOLD

Slide 11 - 12: INDUSTRY GROUPS

Slide 13: MARKET SECTORS

Slide 14 - 15: MARKET INDICES

Slide 16: SECTOR ROTATION MODEL

Slide 17-28: RECENT CHART EXAMPLES

Slide - 1

- Bonds and commodities trend in opposite directions

- Commodities follow lead of stocks

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- In a deflationary environment, bonds and stocks decouple

- They trend in opposite directions

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- Stocks and the dollar are falling together : bullish for gold

- Stocks and gold stocks trend in opposite directions

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- Retailers lead market rallies at bottoms

- Cyclical stocks lead at bottoms

- Small stocks lead at bottoms

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Sector Rotation ModelFrom: Stockcharts.com

Fidelity Select Insurance Top Sector FundFriday, April 5th, 2002

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AeroSpace/Defense Comes in SecondFriday, April 5th, 2002

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Medical Delivery in Third PlaceFriday, April 5th, 2002

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Small Stocks Doing Better Than Large…Wed, April 10th, 2002

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Small Value Outperforms Small GrowthWed, April 10th, 2002

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Gold Stocks As A Market HedgeFriday, April 26th, 2002

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Gold Stocks Move Inversely to MarketFriday, April 26th, 2002

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Russell 2000 Falls Under 50-Day LineFriday, May 10th, 2002

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Small Stocks SlippingFriday, May 10th, 2002

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Confessions of a Technical Analyst : We’re Really Fundamental Analysts

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Charting is SimpleKnow UP From DOWN: UP is Good… DOWN is Bad

Slide - 27

This is UP… UP is Good

Slide - 28