🧠 Understand the 🚂 American #Railroad Sector 🚃 Rally of Nov 2013
🧑🏫 Step-by-Step Explanation 🏫 of the successful 🏭 Sector Uptrend 📈 in the 🚂 Dow Railroad 🚃 Average (DJUSRR) and the North American Railway Sector during November 2013, which occurred after a 🏭 Sector Breakout 🎆 on 22nd November 2013.
by Charles Adams
1) 🐤 Early-Bird Breakout 🎆 - The Leader
Numerous research papers have proven that sectors represent an increasingly important fraction of security returns . Within the transportation super-sector, the railroad sector constitutes an important constituent alongside the airlines, courier, marine and road sectors . As a logical result, returns across the various individual stocks within the railway sector are highly correlated and display lead-lag relationships or concerted moves which can be exploited for great profit.
On 23rd October 2013 NSC exhibited a sudden remarkable jump in its share price, surging 6.77%.
Fig.1: Leader Breakout in NSC on 23rd October 2013. Kindly Click to Enlarge the High-Quality Sector Rotation Chart.
2) As It Happened: The High-Weight 🏭 Sector Breakout 🎆 on 22nd November 2013Instead, the sector rotation trader would wait to see if the rest of the sector would start participating. Meanwhile, NSC remained in a tight bull flag after its massive jump. This is often a sign of the leader dragging up the entire sector. On 22nd November 2013 a bullish sector breakout finally occurred in the DJUSRR Index:
Fig.2: Sector Breakout in DJUSRR on 22nd November 2012. Kindly Click to Enlarge the High-Quality Sector Rotation Chart.
3) Aftermath of the Sector Breakout: A Bullish 🏭 Sector Up-Trend 📈The result was a profitable upmove over the next few weeks.
Fig.3: Sector Upmove. Kindly Click to Enlarge the High-Quality Sector Rotation Chart.
📝 References 📃
- ^ McIntosh, Sector Strategist, p.30-31.
- ^ Pring, Active Asset Allocation, p.281, p.288.
📘 Bibliography 📗
|McIntosh, Timothy J. 'The Sector Strategist: Using New Asset Allocation Techniques to Reduce Risk and Improve Investment Returns'. 1st Edition. Hoboken (New Jersey): John Wiley & Sons, 2012. 226pp. ISBN: 978-1-118-17190-5. Borrow or Buy: [ amazon | biblio | worldcat | abe | isbnsearch | justbooks.co.uk | gettextbooks | goodreads | openlibrary | univ. manchester | librarything ]. Introductory work on sector rotation.|
|Pring, Martin J. 'The Investor’s Guide to Active Asset Allocation: Using Intermarket Technical Analysis and ETFs to Trade the Markets'. 1st Edition. New York (NY): McGraw-Hill, 2006. 385pp. ISBN: 978-0-07-149159-4. Borrow or Buy: [ amazon | biblio | worldcat | abe | isbnsearch | justbooks.co.uk | gettextbooks | goodreads | openlibrary | univ. manchester | librarything ]. Advanced work on asset allocation and sector rotation.|