Sector Rotation : Week 2/10

Last year 2009, the top 3 sectors goes to Technology (49.45%), Materials (46.23%) and Consumer Discretionary (40.24%). Financial (29.41%) also did quite well as it manage to outperform the S&P500 Index (27.65%). Industrials (22.34%), Energy (21.90%), Health Care (19.69%), Consumer Staple (16%) and Utilities (5.61%) fall under expectation.

This year, the main growth should be Energy and Material in the first few quarters. This is because of the excessive dollars that have already flooded in the market. They should be pushing for the higher price levels before the Fed decide to tighten the monetary policy. Once the Fed decided to tighten the monetary policy, mid to small cap local companies will likely to benefit from it.

Health Care will be another sector to look out for this year 2010. This is because they are one of the essential sectors to the economy and most of them are cash rich. Stability will also be the key for Health Care in this year. Safe money will likely to flow into the stable growth sector, Health Care.

The fate of the Technology sector in this year will be on the hand of the Tablet PC market. If the response from the public is good, then technology will likely to be the leader once again in this year. The main beneficiary will be the semiconductor company.

In conclusion, there are many promising sectors going forwards in this year. However, the confirmation is still not yet clear. Therefore there will be a certain amount of risk involve in each sector. The street will also look upon Oil and U.S. Dollars as guide to decide where to park their money. Lastly, trade with cautious will likely to emerge as a winner in this year.