Investors pull money out of one sector and move it into another, which often comes before a change in market leadership. Sometimes mislabeled as liquidity rotation; the platform's term is Sector Rotation.
What this rotation is
Sector Rotation (Sector Rotation) is the move of institutional liquidity from one sector to another as the economic cycle changes: defensives in fear, financials and industrials in recovery, tech and growth when liquidity expands, energy and materials with inflation. The index can sit flat while whole continents move underneath it.
Why read it before individual stocks
Half of a stock's move comes from its sector: the best name in a neglected sector swims against the current, while an average name in a favored sector is carried by the wave. Reading the group's direction first makes picking individual names a swim with the current, not against it.
How we measure it
By relative strength: each sector's performance against the index across several windows, the share of its components above their moving averages, and its funds' flows. That draws a map of who leads and who is being abandoned before the story completes in the headlines.
Hypothetical example
A month where the index drifts ±1% while energy gains 9% and tech loses 6%: a market that looks 'flat' is going through its biggest quarterly repositioning underneath. Whoever read the map boarded the new leader early.
Common mistake
Chasing the rotation after it is finished: the sector that made the headlines has usually been leading for weeks. The early signal is relative strength quietly improving from the bottom, not the glare of the top spot.
How to read it without predicting
Rotation is described by relative strength, not by forecast: ranking sectors by rate of change puts the leader and the laggard on one line. The theoretical cycle (defensive, then cyclical, then tech) is a guide, not a law. What is measured always comes before the theory.
Where to see it on the platform
The Sector Rotation map shows the relative strength of all 11 sectors across its time windows, and the stock scanner shows each sector's heat and its components.
The sector rotation board ranks sector funds by their measured relative strength.
