How to detect money flows from one sector to other.

 There is no direct way to detect moment of money from one sector to other. We need to know what is market rotation is.

What is Market Rotation?

Market rotation is the flow of money from one group of stocks or sectors to another — often in response to:

• Changes in economic conditions (interest rates, inflation, etc.)

• Earnings cycles

• Investor sentiment (risk-on vs. risk-off)

👉 Think of it like tides moving in and out of different beaches — large-cap growth may be hot one quarter, then the tide moves into small caps or value stocks.

📈 What is Relative Strength (RS)?

Relative strength compares one asset’s performance to another. It helps you spot what’s leading and what’s lagging.

For example:

• If IWO (small-cap growth) is outperforming SPY, small-cap growth is showing relative strength.

• If IWD (value) is underperforming IWF (growth), growth is leading.

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📊 What to Track – ETF Cheat Sheet:

ETF	Represents	Use Case
SPY	S&P 500 (large-cap)	Benchmark
QQQ	Nasdaq 100 (growth/tech)	Growth proxy
DIA	Dow 30 (blue-chip)	Defensive / value
IWM	Russell 2000 (small-cap)	Risk-on signal
IWC	Russell Microcap	Ultra risk-on
IWF	Russell 1000 Growth	Growth style
IWD	Russell 1000 Value	Value style
IWP	Russell Midcap Growth	Mid-cap growth
XLF, XLK, XLE, etc.	Sector ETFs	Track sector rotation

🛠️ How to Track Market Rotation & RS

✅ 1. Use Ratio Charts

Compare two ETFs by plotting their ratio:

• In TradingView or ThinkorSwim, type:

  IWM/SPY, QQQ/SPY, IWF/IWD, etc.

• Rising chart = First ETF is showing relative strength

👉 Example:

If IWM/SPY is rising, small caps are outperforming large caps.

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✅ 2. Track Sector ETFs

Use sector ETFs like:

• XLK (tech), XLF (financials), XLE (energy), XLI (industrials), XLY (consumer discretionary), etc.

Plot them vs. SPY to see where money is flowing.

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✅ 3. Weekly Relative Strength Table

Each week, review YTD, 3-month, and 1-week % changes for key ETFs:

• Top 2-3 leaders = where money is flowing.

• Bottom 2-3 = sectors to avoid unless bottom-fishing.

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✅ 4. Look for Rotation Signs

• 🔼 IWM & IWC strong = risk-on, favor small-cap, growth plays.

• 🔽 QQQ or XLK weak = tech pullback, maybe shift to cyclicals or energy.

• 🔼 IWD, XLF, XLE strong = value rotation, watch banks, energy, defense.

• 🔼 XLV, XLP, XLU = defensive positioning (market caution).

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🧠 Pro Trader Trick:

Overlay RSI or Mansfield Relative Strength on these ratio charts to get visual confirmation of strength trends.