A New Way to View Sector Performance Using FinViz

Mar 6, 2011: 6:50 PM CST

I’m a huge proponent of segmenting the broader stock market into sectors and then comparing which sectors are outperforming the other using insights from the classic Sector Rotation model.

I came across a new way of viewing sector breakdown performance from FinViz’s website with their Group Screener Grid tool and I wanted to share that link along with the current annual and 6-month sector performance charts.

Here’s the 1-year view of the Sectors:

Given this isn’t my tool and I’m not a professional at explaining it, but what we’re seeing is a ranking system of industry group/sector performance taken in incremental measurements (little snap-shots) over the past year.

What’s most interesting to me is that – moving left to right – you can see how the sectors stalled out towards the April 2010 high and then all ‘crashed’ during the May Flash Crash period and flat times until the market bottomed in early September.

From there, the market has been in non-stop uptrending mode and you can see that as the numbers (and colors) increase as we move to the present.

When you’re looking at the S&P 500 daily chart, you’re seeing the movement of all 500 stocks but a neat little tool like this shows you how each sector moved within the broader market move.

For investors (and short-term traders), you want to know first in which direction is the broader market moving (up, down, or sideways) and then know which of the nine or ten (depending on how you divide it) sectors are out-performing or under-performing the other sectors.

While you can keep it here on an ETF level and trade the strongest diversified ETF, you can take it a step further and buy a basket of the top three or four (fundamental and technical) stocks in the strongest sector in a rising market to add additional performance to your portfolio.

Right now, strength is concentrated in the Conglomerates (big companies), Basic Materials, Industrial Goods, and Technology sectors which are consistent with the Sector Rotation model and the “Offensive” sectors.

Those that aren’t doing so well – and rightly so – are Utilities and Health-Care (traditionally “Defensive” or protective sectors).

One stand-out to me is that the Financial Sector isn’t doing well at all – and really hasn’t done well for the entire time we see this performance grid.  That’s something you should know and keep as a reference.

I enjoy seeing the full-year picture and the ups and downs of the market, but here’s the zoomed-in 6-month performance chart:

Again, we see Basic Materials, Conglomerates, Industrial Goods, and Technology out-racing the other sectors, though you really couldn’t have gone terribly wrong in the non-stop rising market we’ve had since September 2010.

You make more money as an investor by participating in the top stocks in the top sectors in a rising market, but the rising market has boosted almost all stocks and certainly all sectors over the last six months.

The defensive names – along with an unusual underperformance by Financials – have lagged behind both the broader market and other sectors.

We expect defensive names to be stable and steady – falling less in a bear market and also rising less in a bull market.

These are names you might want to use as hedges – particularly the weaker stocks in the weaker sectors.

Anyway, I just came across this tool and thought it was a neat way to see inside the market a bit.

Corey Rosenbloom, CMT
Afraid to Trade.com

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1 Comment

One Response to “A New Way to View Sector Performance Using FinViz”

  1. can i invest in gold Says:

    Could the dear webmaster explain why he has only written this quite small article instead of a really long sophisticated post. It was interesting though and I hope you can elaborate more on it. Thanks