Page 1078 - How to Make Money in Stocks Trilogy

64 HOW TO MAKE MONEY IN STOCKS—GETTING STARTED

How IBD Ranks Broad Sectors, Industry Groups and Group Leaders

33 SECTORS
Ranked daily in the
IBD Smart NYSE NASDAQ Tables

197 INDUSTRY GROUPS
Top & Worst 40 groups listed daily. Full rankings Mondays
in IBD’s 197 Industry Sub-Group Rankings

TOP 5 LEADERS WITHIN EACH GROUP
Ranked daily in IBD Stock Checkup

We start with sectors, dividing all stocks into broad categories like Retail,
Building, Computers, Energy and Medical. Those 33 sectors are then ranked
daily based on the price performance of the stocks within each sector.
That’s an important first step, but it doesn’t tell you the whole story. To
more clearly pinpoint where institutional investors are putting their money,
check the industry group rankings.
IBD’s 197 industry groups break down the broad sectors into smaller fac-
tions made up of stocks that are closely aligned in terms of the specific busi-
ness they’re in.
This is crucial because, for example, Retail may be the #1 sector, but
which specific groups are leading that growth? Which groups are lagging?
There are 18 different industry groups within the Retail sector, including
Consumer Electronics, Discount & Variety, Internet, Leisure Products, and
Restaurants. You want to know which ones are showing the most strength
and moving up in the rankings—because you want to see where institutional
investors are putting their money.

Rise of the Discounters
Here’s just one example of why checking industry group rankings is an
important part of your stock-picking process . . .
In February and March 2010, the Retail sector was consistently among
the top five sectors. Within that sector, the Retail–Discount & Variety indus-