As you both know from the last meeting, I’m launching a quest to better understand sectors. Knowledge of sectors and which sectors are hot or cold is vital to individual stock picking, since analyzing the sector performance and ranking vs. other sectors should be one of the first criteria any trader or short-term (less than 1 yr) investor employs to determine whether a stock is a buy or sell. The strength or weakness of the sector is useful and can be a primary component of buy and sell decisions for individual stocks.

The absolute best sector analysis tool can be found here: Note how you can change the views on the left to explore how sectors have performed over various time frames. Clicking on any sector will list all the stocks contained within the sector (nice!). Not sure which sector the stock you’re researching is in? Just perform a little search using the “Sector Finder” in the upper left corner and the tool will show you which sector the stock is in.

With this site, you now can perform sector analysis in a few minutes and with just a few clicks. Add this to you stock selection checklist! Also, be sure to check back in on the sector periodically since you might find sell indicators on the site as well.

In the spirit of open-ended posts, here’s a question: how else could you use the sector performance information as buy, sell or hold information?