Sector and microsector tops and bottoms

[greggles]

Lots of money to be made by picking the tops and bottoms of sectors. I did a search for a thread on this topic but couldn't find anything specific enough. There are threads on sector rotation and the next boom sector but I'm primarily interested in sector tops and bottoms to facilitate both short and long trades.

I mean sector in a very narrow sense. For example, in mining you can have the base metals sector or go one level narrower and discuss the copper sector. So sector in this sense just means an industry, no matter how narrow. BNPL, for example, is a sector in this narrow sense, even though it's arguably a subsector of retail. I just did a Google search and apparently these narrow subsectors are known as microsectors. You learn something new every day.

Taking a microsector approach expands the sector universe and also increases the possibility of more rapid share price movement as I think it's logical that microsectors can boom and bust faster than broad, larger sectors. This means a short or medium term approach can be employed depending on the type of sector you are interested in.

Anyway, the point of this thread is for anyone here to suggest that a sector or microsector is at or near a top or bottom and provide some reasoning for that position. Others can then either concur or disagree or perhaps even just suggest another sector that might be near a top or bottom. Hopefully some interesting discussion can be had.

 

[Dona Ferentes]

Great content to stimulate the brain cells, @greggles .

In a way to organise my information, my watchlists have grown and refined/ reshuffled to reflect essentially this reality. Too much information can overwhelm so each list is drilled down to subsets, microsectors if you like, with only about 6-8 and max 10 stocks, which have comparable characteristics. These can be along lines of market cap, location, how far up the development curve and of course the main focus of activity.

This organisation, for me, benefits from my existing investment in larger caps, either directly or through LICs so I don't really dwell on top 300 stocks (for this exercise). Been there, own them. Another development has been that I run lists of ETFs even though I don't invest in any. There are sufficient ETFs out there such that I am now finding I can match one for most watchlists. Not a completely accurate reflection but it lets me see movement, quickly.

I'll put up my list of microsectors; some caution is needed as lots of smaller companies seem to be across subgroups (e.g. going from gold to REE, or suddenly develop an interest in lithium, etc).

 

[peter2]

I've done something similar however I haven't created micro-sector indices or # new highs/lows or Advance/Decline values in each m-sector that will not only indicate the hot/cold m-sectors but (more importantly) which ones are warming up.

 

[greggles]

Interesting gentlemen. Thank you for your thoughts. I like the idea of creating your own sector or microsector indices through custom watchlists and potentially using these as an indicator in conjunction with other data, although this seems like a variation on a shorter term swing trading approach. I also like the idea of cross referencing these custom indices against ETFs or other indexes for verification. Some good food for thought. Thanks.

 

[peter2]

I'd like a scan that shows me the numbers of stocks in each list that had an up week, plus a moving ave of this value and the relative strength comparison of the MA to the market (XAO or other general index).

One of the smaller lists is helium. Wouldn't it be interesting if this list showed a week where 90% of the stocks in this list had an up week.

 

[frugal.rock]

I'll be putting a buy on ASM tomorrow for longer than a short term hold.
Rare earths itself probably near a top in the cycle, but, individual stocks are a different story, imo.

 

[frugal.rock]

I failed to get an order in when I should have. I hate chasing, although sometimes it's ok...

 

[frugal.rock]

Graphite appears to be in favour today?
Will look into it later.

 

[frugal.rock]

Rare earths follow up chart.
Here to make a post on nickel though...

 

[frugal.rock]

Nickel