Using industry analysis can play a very important role when looking for quality stocks to place into your portfolio or looking for laggards to sell. As we know, sister stocks travel in groups and 50% to 75% of a stock’s move can be attributed to the industry group itself. Therefore, it is a smart idea to study which groups are the strongest and which groups are falling out of favor.
Looking below, we can see that several Oil & Gas related industry groups are topping the charts along with metal related groups over the past week. They are the groups making the strongest advances over the past five trading days according to the data from IBD. I do gather the majority of my data from the electronic version of Investor’s Business Daily and have been a member since 2001.
When viewing the strongest one week and year-to-date moves, we can see that growth stocks are not leading the market as industrial related industries are making the best gains. Oil, metals, machinery, energy and trucks are populating my screens which tell me that the market is in defensive mode, not offensive and that is why much of my account is in cash (among other reasons).
Top 10 One Week Industry Moves:
Diversified Operations
Metal Ores – Gold/Silver
Oil & Gas – Field Servic
Oil & Gas – US Expl Pro
Utility – Electric Power
Metal Prds – Fasteners
Comml Svcs – Printing
Tobacco
Food – Misc Preparation
Oil & Gas – Drilling
Top 10 Year-to-Date (YTD) Industry Moves:
Oil & Gas – Machinery
Energy – Other
Auto/Truck – Original Eqp
Machinery – Farm
Oil & Gas – US Integrat
Machinery – Constr/Mining
Trucks & Parts – Hvy D
Comml Svcs – Schools
Machinery – Tools & Re
Elec – Parts Distributors
It is also important to follow the weaker industries so you can determine the overall market trends and trade according to the stocks in favor. Several hi-tech growth industries have fallen to the bottom of the pile over the past week and for the year. Multiple computer and internet related industries are leading the market to weakness as retail and finance are not far behind. Of course I can’t forget to mention that the residential building industry has lost its recent steam but seems to be gaining some support near multi-year lows. This could be a buying opportunity area for longer term value investors if support holds.
Bottom 10 One Week Industry Moves:
Bldg – Resident/Comml
Soap & Clng Preparat
Retail – Consumer Elec
Internet – Content
Retail/Whlsle – Jewelry
Retail – Leisure Products
Finance – Investment Bkrs
Telecom – Equipment
Leisure – Hotels & Mot
Bldg – A/C & Heating
Bottom 10 Year-to-Date (YTD) Industry Moves:
Computer – Peripheral Eqp
Computer Sftwr – Desktop
Finance – Investment Mgmt
Retail/Whlsle – Cmptr/Cell
Bldg – Resident/Comml
Finance – Investment Bkrs
Retail – Consumer Elec
Retail – Leisure Products
Medical – Ethical Drugs
Computer-Manufacturers
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