Sector Momentum

The stock market is broken up into several different indices and sectors. The best way to trade is to "go with the flow." If a stock's sector is doing well, then odds of that stock outperforming the market are much greater. 

It's also a good idea to know which way a sector or index is headed using different timeframes. Sometimes, a short-term perspective is too choppy to get a "feel" for the market. When you start looking at weekly or even monthly timeframes, the charts start to make even more sense. Again, the idea is to go with the flow.

How Do I Use This Sector Stuff????

• OK, first of all, you will see the sector name listed under Index.

• Next to the name, you will see the Closing price and the Percent Change. I believe those are self-explanatory.

Daily Signals

• Under the heading "Daily", you will see the daily short-term momentum opinion. The signals are Up, Down, and Neutral. This tells you the short-term trend of the sector, and is very important for trading.

Signal Date and Alerts

• Next, we have the Date from which the Daily signal was given. New signals are highlighted in Blue. We often act on the new daily signals, so watch for the Blue.

Long-term Signals

• Further across the image are the weekly and monthly momentum signals and dates. The longer-term signals give you more insight into the magnitude of the trend. For example, the NASDAQ has been in a monthly DOWN momentum signal since October of 2000.

Best and Worst Performing Sectors Ranked

• At the bottom of the graphic, the sectors are ranked by strength and weakness. The top performing sectors are shown, as well as the bottom performing sectors. The index or HOLDR is ranked against itself over the short-term and long-term. This type of relative strength is helpful since a 5% move in the Dow is huge, while it's a relatively small move for something like the B2B HOLDR. Simply sorting sectors by percentage moves is pointless.

Version 1.3

The signals are meant to be used as an indicator of "where the money is" or "where money is leaving". You can use the signals to trade HOLDRs or SPDRs, but the Intelligent Charts do a better job at this.