How I approach sector rotation and frustration

The market just offered us historic moves with rallies nearing 1,500 points in a single day. Actually, the US election unfolded without the predicted chaos. The losing candidate showed great sportsmanship. As a result, this triggered a massive wave of relief. In this article, I explain how I navigate this violent sector rotation and how I manage frustration in trading.

The context: widespread relief 🌍

Briefly put, the market welcomed a peaceful transition. We were promised an apocalypse, but reality is much calmer. Consequently, money is flooding back into the indices. The French CAC 40 and the German DAX are soaring by several percent. Investors are also buying US bonds. The latter are dropping back below 5%. This is a highly reassuring economic sign.

The tension: accepting the reality of trading 📉

Yesterday, I entered the NASDAQ at a low point. I rode the rebound, quite happy with my trade. But after my exit, the index kept climbing for another 1,000 points. Honestly, it’s incredibly frustrating.

Yet, that is what being a trader is all about. Making money, then realizing we could have done much better. No one predicts the future. By the way, if that worked, astrology magazines would have been rich a long time ago. Anyway, we just have to deal with this inertia.

My 4 key market observations 🔍

To properly understand this current asymmetry, here is what you need to watch right now:

1. Severe sector rotation: Data center companies have plummeted by 25%. In fact, the governor of California wants to slow down their construction.
2. A two-tier technology sector: Microsoft leaps by 6%, while microchips are diving. Besides, Seoul lost 4% overnight.
3. The drop in oil: Prices tumbled by nearly 20% in just a few days. Diplomacy is easing, therefore tension is dropping. You will certainly see it at the gas pump soon.
4. Gold and Bitcoin at resistance: Bitcoin bounced back but is stumbling on a bearish trendline (a technical ceiling). Gold is climbing somewhat, without decisively breaking through its key levels.

The trader’s mental framework 🧠

Euphoria is running out of steam; rationality is making a strong comeback. Good assets are rising, bad ones are collapsing. This is a completely normal stratification.

Trading is truly like growing up. It requires discipline and accepting that you can’t have everything right away. Wanting to buy the absolute bottom and sell the perfect top is a pure illusion.

Caution above all ⚠️

Watch out, uncertainty remains high. We are awaiting the big US monthly jobs report (the key unemployment figures). This is the kind of data that can shake everything up. Big portfolios will undoubtedly freeze their positions while waiting for it. For now, the NASDAQ is simply stalling at the previous month’s low.

Conclusion

We are likely in a cool-down phase after a strong rebound. Keep your discipline, respect your mental framework, and don’t try to guess the future.