Discovering sectors that are trending or about to start trending can help investors and traders enter into several profitable trades.
Sector stock analysis helps investors learn about the type of stocks that operators and other biggies are accumulating. The accumulation by the biggies can be anything – better financial condition for the companies going ahead (long term prospects) or for the for a quick short term trade.
Whatever reason it may be, sectoral analysis helps investors judge how well stocks in the different sectors will perform in the near-long term.
The analysis would be even sharper and trades more profitable if the data was available live, and based on micro sectors.
Well, you’re in luck, because there is a website that breaks down sectors into micro sectors and helps in your quest.
For example, if the two wheeler segment in the auto sector is trending up, it helps you latch on to two wheeler stocks, and so on.
Before I discuss this website, know that many folks who analyze sectors often refer to sites that give the macro picture.
For example, what use is information that the auto sector is trending up when the sector is up because only 2 wheelers are in an uptrend?
I’m sure you will agree that analyzing micro sectoral data than analyzing the macro data.
You also can drill down into any micro sector and figure out the stocks that are performing and separate these from the duds.
Best of all, it allows analyze information of 111 micro sectors spread over 4 pages!
CASE STUDY OF ANALYZING MICRO SECTORAL INFORMATION
EOD data of 8 June 2018 suggested that the banking sector was very hot and could see an uptrend.
This is how you figure out trending sectors. The next steps would be:
- Figure out the performing stocks per sector.
- Check their technicals using our setup, or any setup you are comfortable with.
- Analyze Options Chain for FNO stocks.
- Keep checking every 15 minutes in the live market and at EOD and make a list of stocks that look bullish or bearish (do not forget to check sectors that are trending down so that you can hedge your long bets).
- Paper trade and check this strategy out for at least a week before you are convinced of its usefulness.