During the last two weeks I’ve been more active than ever before on the live market. I’ve learned something useful every day and bedded down knowledge I have from paper trading.

I have played very strong bearish patterns, with bearish candles, indicators & volume in a bearish market. These have reluctantly pushed down for moderate gains. So why are these trades not producing better results?

I am not particular about the sector of my stock. If it has got a consistently downward sloping 50dma and the factors listed above that’s good enough for me. Looking at sector performance stats makes me realise I am missing a piece of the puzzle. The additional weight that under-performing sectors would add to a bearish set up in a bearish market would surely be considerable.

This entry at self-investor is instructive. In summary identify the sector which is at the start or middle of its decline NOT the end. Time-frames are as ever important. Sector Harvest is so specific & detailed it is almost tailor made for my problem. This online book ‘If It’s Raining In Brazil Buy Buy Starbucks’ has a good chapter on sector dynamics. This explanation of ETFs is good.

Basic Theory: A sector’s success depends on its

1. Customers – Consumer, Business or Government.
2. Costs – labour, capital or fuel intensive.
3. Dependence or independence to the business cycle.
4. Export or non-export orientated.
5. Exposure to regulatory & exogenous shocks.

What level of granularity is required when defining sectors? Atleast 35+ sectors to be meaningful. Am I skilled enough to assess the fundamentals of each? NO! So I’ll need an easier & quicker way of doing it.I could try using my trading tool (Sharescope), a web based service or a Self-Investors subscription.

1. Sharescope – why on earth does it not have sector information for US companies? Granted it is a UK product but if it has prices for US stocks it could surely have a sector classification. That is basic info. I’ll phone them on Monday in case it’s user error.
2. Web based – Yahoo Finance has a nice set up. What I need is a graph with each sector on it. I’ll have a hunt but in the meantime I’ll record leaders and lagard in excel. Its a shame the timeframe isn’t dynamic.
3. If the other two don’t work I may go for Self-Investor. I’d rather have everything I do under one platform (ie Sharescope or a US client based package).