Telltale Signs of Sector Rotation

Michael Johnston submits:Sector rotation techniques have been around for decades, a relatively simple strategy often used by investors seeking to capitalize on short-term mispricings in order to generate alpha. In its most basic form, sector rotation involves segmenting the equity universe by industry, and moving into and out of various sectors depending on relative attractiveness from a valuation perspective.

From David Rosenberg of Gluskin Sheff The Long And Short Of Risk-On, Risk-Off

Steven Horwitz Lars Christensen's post on Rothbard's America's Great Depression over at Market Monetarism serves as a useful reminder about what the Austrian cycle theory can and cannot do. 

Steven Horwitz

Paul Krugman asks a good question:And now as then, the whole notion [TC: what I call sectoral shift theories] falls apart when you ask why, say, a housing boom — which requires shifting resources into housing — doesn’t produce the same kind of unemployment as a housing bust that shifts resources out of housing.This of course was also Sraffa's 1932 critique of Hayek.  I would cite a few points:

China's official manufacturing PMI report held steady at 50.6 in December, while the final HSBC report came in at 51.5, the highest reading in 19-months.

To say that today’s broad market picture is “unpredictable” would be a gross understatement. On a macro level, there are enough cross currents and shifting dynamics to give even the most seasoned trader vertigo.

Don’t look now, but US equities are just a couple of percentage points from going negative on the year. The S&P 500 (which was up as much as 12.8% in early April) has given back nearly all of its 2012 gains, and considering the increasing volatility, it won’t take much to push the benchmark average into the red.