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How to Use Cyclical Analysis to Trade the Right Market Sector (Part 3)

06/11/2008 12:00 am EST


John Person

CEO, John Person, Inc.

As you see in figure 3 we have American International Group (AIG) the chart pattern here does not typically represent the overall ETF. One reason is this company has made lower lows than the trough in 2003.

Figure 3

Here is one more top holding of this sector, it is Citigroup (C) as the chart shows in figure 4, it too has taken out the lows of 2003 and therefore we would say that it either is not a strong candidate to move in sync with the overall sector ETF or one could argue since it is deeply depressed that it has room to move higher and might outperform once the economy starts to expand. I believe that it is always best to trade with the best relative strength in a group and both (AIG) and (C) are not within that definition.

Figure 4

More in Part 4 tomorrow.
By John Person

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