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Swing Trading Using Sector Analysis

When you are Swing Trading you want to trade the strongest stocks in the best performing sectors. This is how we make the BIG money that we are looking for.

Instead of trying to bottom fish and hoping a cheap stock comes back, doesn’t it make a whole lot more sense to just go with the stocks that are outperforming the market?

Seriously; I see many traders losing money because they refuse to do the one thing that would put the odds in their favor. Only buy the strongest stocks in the strongest sectors. Just doing this is going to make your job as a swing trader so much easier.

So how to we go about finding these strong stocks?

The first thing you need to know is what are the sectors and the stocks in that sector. The Select Sector SPDR’s make that easy.

Once you are there, click the View Sector Tracker.

Swing Trading - Sector Analysis - SPDR's

 

That will give you the ability to view each sector and how it has been doing in the time frame you chose:

 

Swing Trading - Sector Analysis - Best Performing

I like to look at the sectors over the last 3 months, that gives you enough time to see what is performing well but not getting “Long in the Tooth”.

Swing Trading - Sector Analysis - Best Stocks

Click on Image to See Full Size

When you click on each sector, you can see the best performing stocks in that sector. I am going to use Newfield Exploration. So now that you know one of the best stocks in the best performing sectors is, you just now need to know when to enter.

Swing Trading - Sector Analysis - NFX

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So looking at a chart of NFX we can see it is in a solid uptrend. We just need to wait for the optimal entry point. In this case I drew a trend line that follows the trend pretty well and you can see how the pullbacks to the 20 MA have been stellar entry points. So all you should do now is put NFX on your watch list (along with some of the other stocks in the XLE). Then keep an eye on it for it to pull back to the 20 MA for your entry.

By only Swing Trading the strongest stocks in the strongest sectors you will be putting the odds squarely in your favor. Of course if you don’t have the time to do all this analysis, this is where using the services of a Professional Stock Picking Service will come in handy as they will do all the research for you.

Here are the two I use in addition to my own research: Microcap Millionaires and Jason Bond Picks

You can read my reviews of them here: Microcap Millionaires Review and Jason Bond Picks Review

If Penny Stocks are your thing, then you should definitely check out Microcap Millionaires.

Read my review of Microcap Millionaires

Regardless of which Stock Picking Service you use or if even if you choose to go it alone, please download my free eBook: “The 7 Habits of Millionaire Traders

You can read all my reviews on stock picking services here:

Stock Service Reviews

If you are looking to open a brokerage account or looking for a better one, I wrote some reviews of brokers I have used and currently using.

OptionsHouse Review (Currently Using)

Scottrade Review  (Used when I first started)

If you have any questions on sector analysis, feel free to contact me.

– Robert Walsh