80% of a stock move is because of its sector

[safvan]

They say that the reason a stock moves quickly upwards is because the sector/industry is hot and a lot of new money is being poured into it. It makes sense.

Now for short term momentum traders, we could simplify our strategy and just look for Industry strength for a given week or month and then trade stocks that are strong in it.

That basically is an easy way to look at the markets and trade.

Discuss..

 

[wackypete2]

I knew traders who traded stocks in pairs. Long a stock from a strong sector, short a stock from a very weak sector. I've never tried that strategy myself but it does seem to have merit.

Peter

 

[safvan]

I mean Peter think about it. It makes perfect sense. If the smart money is flowing in or out of a particular industry for a given week or month or a year, this is where you should be trading at because this is where one can find the most liquidity and price action. A stock moves up and down rapidly when the big money supply goes in or out.

A bit I need to add into this. A sector is a general term where a lot of different kinds of Industries can exist. Its the Industries where we should focus on for example as of this writing BASIC MATERIALS sector is on the move however within this sector SILVER industry has been showing strength for the past week and month with the highest returns. So we should really be look to buy silver mining stocks.

Again this is for SHORT term trading not long term investing. Simple fact is that money flow keeps changing with time dependent upon whats IN at a given time.

For long term investing we should invest in leaders of a given sector. Defining yourself is important in this game.

Safvan