Analyze the Broad Market
The overall conditions of the broad market have an enormous effect on individual stock prices. Being constantly aware of the overall condition of the market is critical to your success as a trader. Entering into a trade without first understanding what the broad market is telling you is like taking a trip without travel plans. You know you're going somewhere, but where you'll end up is anyone's guess.
Similar stocks within the same sector have a strong tendency to move in the same direction over the shortterm,
and individual stocks have a strong tendency to affect their entire sector, especially if the stock is among the larger or more popular stocks in the group. The larger the company capitalization, the more likely it is that its individual price action will affect the rest of its peer stocks within the sector.
Sectors, Industries, and Individual Stocks:
While stocks have a tendency to move together in the same direction, sectors, industries, or industry groups of stocks normally go through a rotational process, as some sectors are stronger or weaker than others during certain periods of time. Stocks within the same sector are very likely to trend or move in the same direction at the same time. It is extremely beneficial for a trader to know which sectors are experiencing strength or weakness for the given time period.
The Broad Market is divided up into Sectors
|
Long ETF |
Short ETF |
Double Long |
Double Short |
Triple Long |
Triple Short |
| Large Cap |
SPY/DIA |
SH/DOG |
SSO/DDM |
SDS/DXD |
BGU/UPRO |
BGZ/SPXU |
| Small Cap |
IWM |
RWM |
UWM |
TWM |
TNA |
TZA |
| Science Technology |
QQQQ/XLK |
PSQ |
QLD |
QID |
TYH/TQQQ |
TYP/SQQQ |
| Semiconductor |
SMH |
|
USD |
SSG |
SOXL |
SOXS |
| Financial |
XLF/KBE |
SEF |
UYG |
SKF |
FAS |
FAZ |
| Real Estate |
IYR/VNQ |
REK |
URE |
SRS |
DRN |
DRV |
| Energy |
XLE/OIH |
DDG |
DIG |
DUG |
ERX |
ERY |
| Basic Material |
XLB |
SBM |
UYM |
SMN |
|
|
| Emerging Market |
EEM/VWO |
EUM |
EET |
EEV |
EDC |
EDZ |
| China Market |
FXI |
YXI |
XPP |
FXP |
CZM |
CZI |
| Oil |
USO |
DNO |
UCO |
SCO |
|
|
| Gold |
GLD/IAU |
DGZ |
DGP/UGL |
DZZ/GLL |
|
|
| Silver |
SLV |
|
AGQ |
ZSL |
|
|
| US Dollar |
UUP |
UDN/FXE |
EUO |
ULE |
|
|
| Euro |
FXE |
UUP |
ULE |
EUO |
|
|
| Long Term Goverment Bond |
TLT |
TBF |
UBT |
TBT |
TMF |
TMV |
|
|
