Time to get out of energy The current Relative Rotation Graph for US sectors is sending a very clear message for two sectors!
Money is flowing OUT of Energy stocks (XLE) and INTO Staples (XLP). The opposite rotation for those two sectors is almost jumping off the screen when you open up this RRG.
It is not every day that such a clear opposite rotation shows up hence it deserves my attention ;)
Both sectors are showing a very long, and powerful, tail. The Energy sector in recent weeks rotated from a strong position inside the leading quadrant into the weakening quadrant while gradually bending into a negative RRG-Heading (180-270 degrees).
The Consumer Staples sector is on an almost identical path in opposite direction. Coming from a very weak position inside the lagging quadrant it started to rotate upward and move into the improving quadrant a few weeks ago. The length of the tail and the strong RRG-Heading suggest that there is more positive rotation in store.
This rotation clearly indicates that there is money flowing from Energy stocks to Consumer Staples stocks at the moment. The length of the tails on both sectors and the direction in which they are heading suggests that this process will continue a bit longer.
