I imagine you are talking about splitting the leaders in an industry from the second tier stocks, right?
Also do you think it would help the trader monitor the market if stocks were classified further? For example, there are some stocks that can be considered market leaders that many look at to determine the health of the market itself. Perhaps these are companies that the more conservative players invest in that everyone is familliar with, including foreign money. This can be stocks like GE which is part of the DJIA. Then there can be the sentiment driven stocks. This is the stock that can reflect the positive sentiment of the market or sector. I think SUNW may qualify for this. Just as industries have their secondaries, the market can too. Take IBM for instance. This is a "has been" market leader. But in the later stages of a bull market, money may be looking for a place to go in a very recognizable company. IBM can take on this role like I think it has been doing lately.
So there are the "up and coming" high-flyers like DELL, there are the more mature growth companies that have a history of posting very good returns like INTC and MSFT, then there are the industry leaders of the past that are companies further down their growth curve but still very solid companies like TXN and IBM. Then there are the companies that have no leadership potential (perhaps sometime in the future) that see money by exhuberant market players in search of places to go. Many of the Internet stocks can be considered part of this group. I am suggesting each will have its time in the market, and when they do, this can reveal the character of the market in terms of sentiment, how far along the market is in the bull run, and even how prone the market is to a setback, or looking at the flip side of this, how strong the current bull uptrend is.
Just some ideas.
Bob Graham |
