The Power of Industry Group Strength

[billyjoe]

It's been said a top stock or 2 in a strong group will drag even a not so good stock along for the ride. A poor stock in a leading industry will often perform better than a great stock in a lousy industry group. A good example of this being airline stocks. Airlines have been doing great for the last year and in most cases 2 years with a few dips along the way. With the big drop in fuel costs the airline industry group should continue to be strong for the next several months. Here's how the top 8 have done Year to Date and over the last 2 years.

HA---YTD +126% Price range last 2 years 6-19
LUV--YTD +112%-------range 9-40
AAL--YTD +79%--------range .20 to 45 merger with formerly bankrupt AAMRQ
SAVE YTD +68%--------range 17-80

DAL--YTD +64%--------range 28-45
ALK- YTD +54%--------range 20-56
UAL--YTD +54%--------range 36-58
JBLU YTD +49%--------range 9-13

Find any of the top 5 industry groups and check out the stocks in the group. There's money to be made. I've cashed in on 3 of the airlines. I'll probably buy another one tomorrow.

-----------------billy

[riverbabe]

VA = shoulda woulda coulda. Re. industry groups, when examining these, also look for the best performer and the worst performer for a possible paired trade, one long - one short? http://www.investopedia.com/articles.../04/090804.asp

I personally have not tried this, but AAII has given tutorials on it.

[billyjoe]

River, That's a good idea. If a company stinks while others doing the same thing are hitting new highs it would seem shorting is the thing to do. When the tide turns, the bad performer will head towards 0. I'll look up and post the worst airlines shortly (no pun intended).

---------------------billy

[billyjoe]

The worst airlines are Control Adora VLRS -41% this year and Latam Airlines LFL -31% this year. Both are shortable. There are actually worse but they either aren't shortable or have no volume.

----------------billy

[billyjoe]

Bought some LUV today. Can't argue with the continued success of the airlines. Bought and sold it earlier this year for half the current price.

-----------------billy

[IIC]

I wholeheartedly agree...Who's Groups do you follow?

[billyjoe]

I wholeheartedly agree...Who's Groups do you follow?

Sharptraders of course and Vectorvest. Here are my top 10 groups with leaders in each industry.

1. Transport/Airlines---LUV, HA, ALK
2. Computer Makers---SMCI, AAPL, HPQ
3. HMO/Health--------CNC, AET, UNH
4. AirFreight----------FDX, UPS, AIRT
5. Trans/Truck-------ARCB, USAK, ODFL

6. AC/Heating--------AOS, LII, AAON
7. Home Furnishing---WSM, BBBY
8. Supermarkets-----IMKTA, PTRY, KR
9. Painting Products--VAL, RPM, FOE
10. Comp Graphics---CIMT, SNPS, ANSS

-----------------billy

[billyjoe]

Top 10 Groups with leaders in each group week of 1/5/15

1. Airlines-------------LUV, ALK, HA, AAL
2. Computer Makers---SMCI, HPQ
3. Supermarkets------IMKTA, PTRY, KR
4. Transport/Truck----CVTI, USAK, ARCB, ODFL, SWFT
5. AC/Heating MFG.---AOS

6. Home Furnishing----WSM, SCSS
7. Air Freight---------FDX, AIRT
8. Health/HMO--------CNC, AET, UNH
9. Drug Stores-------RAD, CVS
10. Auto Parts-------ORLY, AAP

There are some ETF groups that are more highly rated. These are common stocks.

-------------------billy

[billyjoe]

Top 10 Groups and Leaders in Each 1/10/15

1. Computer Makers---SMCI, AAPL, HPQ
2. Drugstores---------CVS
3. Home Furnishing----WSM
4. Airlines-------------HA, ALK, LUV, AAL, UAL
5. Health/HMO--------CNC, AET, UNH, CI

6. Supermarkets------IMKTA, KR, DEG
7. AC/Heating Mfg.----LII, WSO, AAON, AOS
8. Air Freight---------FDX, UPS, AIRT
9. Comp. Graphics----CIMT, SNPS
10. Drug Wholesale---MCK, ABC, MNK, CAH

---------------billy

[billyjoe]

Top 10 Groups and Leaders in Each 1/16/15

1. Drug Stores-----CVS, RAD
2. Health/HMO-----CNC, AET, UNH, CI
3. Airlines---------ALK, HA, LUV, ALGT, UAL
4. Supermarkets---IMKTA, KR, PTRY
5. Air Freight------FDX, UPS, AIRT

6. Home Furnishings---WSM, SCSS
7. Building/AC--------AAON, AOS, WSO
8. Computer MFG.----SMCI, AAPL, HPQ
9. Containers--------BERY, SEE, GPK
10. Restaurants------BWLD, PZZA, RRGB, CMG

I own 5 stocks on this weeks list: CNC, LUV, FDX, AAPL, BWLD

------------------billy

[riverbabe]

Bill, this thread is very helpful. Thank you!

[billyjoe]

1/23/2015 Some new groups and changing of order in existing leaders.

1. Airlines-------LUV, HA, ALK, AAL, UAL, JBLU, ALGT
2. Home Furnish-----WSM, BBBY, ETH
3. Health/HMO-----CNC, AET, UNH, CI, HNT
4. Retail Food----SVU, CORE, UNFI
5. Retail Drugs----CVS, RAD, WBA

6. Supermkts.-----KR, IMKTA, PTRY, SPTN
7. A/C Heating----WSO, AAON, AOS
8. Drugs Whsle.---ABC, MCK, MNK
9. Candy----------HSY, RMCF
10. Comput. Graphics--PDFS, SNPS, ANSS, CIMT, DASTY

--------------billy

[riverbabe]

CANDY???? Hmmm....and before Valentine's Day yet.

[mimo_100]

billy,

Thanks for doing this - it is very helpful.

I use Stockfetcher and they come up with different industries.

Here are the top 11 sorted by last 12 months performance ( number of companies in parenthesis)

Retail - Convenience Stores (3)
Semi Memory (3)
Uniform And Related (4)
Transportation - Airline (21)
Medical - Hmo (12)
Semi Graphical (1)
Food - Meat Products (5)
Government Services (3)
Appliances - Household (3)
Rubber Tires (2)
Medical - Nursing Homes (11)

[billyjoe]

mimo, We've got some overlap. I don't know the time period for choosing these. I can get a 10 day delta of the top moving industries but that will give completely different results. Keep posting your top 10 when you get a chance. Thanks

---------------billy