When choosing sectors, first consider your options. As stated above, there are broad sector ETFs, such as the iShares Dow Jones U.S. Transportation Average (NYSEArca: IYT), and there are narrower sub-sector ETFs, such as the Claymore/NYSE Arca Airline (NYSEArca: FAA). Bear in mind that the narrower you get, the more volatility you could encounter.
Pick your spots by watching the trend lines – the 200-day moving average can signal to you when to be in and when to be out. The ETF Trend Following Playbook has more on this strategy.
For more information on market sectors, visit our sector category.
Max Chen contributed to this article.