CHONG2

[chichi2]

This theoretical model is based on Sam Stovall's S&P's Guide to Sector Rotation and states that different sectors are stronger at different points in the economic cycle. The graph above shows these relationships and the order in which the various sectors should get a boost from the economy. The Market Cycle preceeds the Economic Cycle because investors try to anticipate economic effects.

 
 Stage:                 Full Recession   Early Recovery   Full Recovery    Early Recession  
 Consumer Expectations: Reviving         Rising           Declining        Falling Sharply  
 Industrial Production: Bottoming Out    Rising           Flat             Falling  
 Interest Rates:        Falling          Bottoming Out    Rising Rapidly   Peaking  
 Yield Curve:           Normal           Normal (Steep)   Flattening Out   Flat/Inverted