Every great trade begins with a great idea. While there's a wealth of places in IBD to get great ideas for your watch list, one feature that investors must check out is Sector Leaders.
Published today on Page B1, the Sector Leaders are the top-rated stocks that meet IBD's most stringent fundamental and technical criteria. These stocks are also the cream of the crop in their respective sectors.
Over the past year through March 6, Sector Leaders shot up 94.2% on a price-weighted basis, far outpacing a 21.6% gain for the S&P 500. Year-to-date through Monday's close, Sector Leaders are already up 16.2% vs. a 3.8% advance for the Nasdaq and 1.6% for the S&P 500.
With the major redesign of the stock tables back in 2008, IBD made it much faster and easier to find the best stocks from each sector. Sector Leaders are boxed at the very top of each sector heading for easy reference. In Feb. 27's IBD, BitAuto (BITA), Facebook (FB) and Qihoo 360 Technology (QIHU) were the three Sector Leaders in the Internet sector, which was ranked No. 2.
Note that not all of the 33 sectors in IBD will have Sector Leaders. To make it even easier, investors don't have to flip through all of the stock tables to look for the Sector Leaders. Charts of all of the Sector Leaders usually appear on Page B1 Tuesday through Friday. The Sector Leaders charts are elsewhere in Monday's edition.
Stocks that make the Sector Leaders list can make for excellent watch-list candidates. Even if they already have broken out, investors should still pay attention and see if they're still in buying range or have crafted a secondary entry point.
While the Sector Leaders can make for trade candidates, they can also help you gauge the overall condition of leading stocks. If Sector Leaders are breaking down even as the market is in confirmed uptrend, then that's not a good sign for investors.
On the flip side, if Sector Leaders start rising in a down market, that gives you a clue to possible improving conditions ahead.
Drugmaker Actavis (ACT) was featured in the July 26 Sector Leaders charts as it formed an eight-week flat base with a 133.10 buy point 1. The stock broke out that same day and has rallied 73% 2 to as high as 230.77.
Other recent winners that appeared in Sector Leaders on July 26 were Jazz Pharmaceuticals (JAZZ), Michael Kors (KORS), Priceline.com (PCLN) and FleetCor Technologies (FLT).