Economic conditions that foster a new bull market include lower interest rates and signs that industrial production is starting to rise.

The stocks of cyclical and technology stocks tend to do well when interest rates are low. These companies often lead the market and can sometimes rally before a recession has completely hit the bottom. As stock traders we can look for positive signs of these sectors improving the industrial production figures to mark the start of an upturn.

The Cyclical Business sectors are:-

  • Automobile and components
  • Consumer Durables
  • Media Companies
  • Hotel / Leisure

Technology:-

  • Chip Manufacturers
  • Computer and Hardware
  • Software
  • Telecommunications
  • IT Services

As the economy continues to grow this leads to a rally in the industrial sectors. Companies with large funding requirements who benefit from low interest rates:-

  • Building Products
  • Construction and Engineering
  • Aerospace and Defence
  • Electrical Equipment
  • Airlines and Freight

As the market nears the top, basic material stocks, energy stocks and consumer staple company stocks do well. Strong positive signs in these sectors could signal that the market is near it’s peak and may turn bearish.

Basic Materials:-

  • Metal & Mining
  • Chemical
  • Construction Materials
  • Paper / Packaging

Energy:-

  • Oil & Gas
  • Coal
  • Refineries

Consumer Staple:-

  • Food & Beverage
  • Household Products
  • Tobacco
  • Luxury Goods / Leisure

Dave J.

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