Here is how to scan for the strongest stocks and the strongest sectors in the stock market. Trading strong stocks in strong sectors puts the wind at our back in terms of finding stocks to buy and knowing there is a large group of buyers pushing the stock, and the sector as a whole, higher.
Focusing on strong sectors is one way to create a stock watchlist, or to zero in on stocks currently performing well. These watchlists can then be used for finding day trading or swing trading opportunities.
As with all things related to trading, take the information or ideas you like, and leave the rest. Or let the concept inspire other ideas. Maybe you like shorting the weakest stocks in the weakest sectors (flip this scan around), or buying stocks that are starting to bounce after weakness. There is no single way to trade, just ideas that you turn into strategies.
How to Scan for Strong Stock Sectors
Here’s how to scan for the strongest sectors using Finviz.com, StockCharts.com, StockRover.com.
I like Finviz because of how visual it is. Most of the tools on Finviz are also free. If you are day trading and want real-time alerts and real-time pre-market data (breakouts, etc) then you may wish to upgrade to the Elite version. For scanning, the free version is all you need.
In Finviz, click on the Group tabs. You’ll see how the Sectors performed over the last day, week, month, 3 months, half-year, yearly, and year-to-date.
For swing trading or day trading, focus more on the weekly and monthly performance. The sectors mentioned near the top have been the top performers over the various time frames. Focus on the top one, two, or three sectors.
Here’s an example of how it looks. Each week this will look different. Go through the process to see the current top sectors. I also discuss the top sectors each week in my Stock Market Outlook.
Looking at the one-month performance, Energy was the top performer at this time. As a whole, the sector moved up 16.54%. This dwarfs the returns of all other sectors. Definitely, a place to focus some attention.
The weekly performance shows that Energy is still the top sector in this time frame too.
If one sector is performing well on the Monthly but is down the list on the weekly, it means it may be moving out of favor. Focus on stocks that rank near the top of the list in both time frames. Any trades taken are likely short-term in nature based on these time frames anyway, so strike while the sector(s) are hot.
Finding the Strongest Stocks in the Strongest Sectors
You now know how to find out what the strongest sectors are. On Finviz, simply click on the sector/group on the Groups page.
This will produce a page filled with charts of all the stocks within that sector. The charts are in alphabetical order and have not been filtered in any way.
To filter the stocks, add in a few criteria so that you know they are tradable.
- Volume over 200k. This is under the Descriptive tab on the scanner and assures the stock does decent daily volume. Increase this to 500k or 1 million if you wish.
- Price over $1, or even higher if you prefer. This is under the Descriptive tab. This is to avoid penny stocks. Ignore this criterion if you don’t mind low-priced stocks.
- Price above SMA200 (200-Day Simple Moving Average drop-down menu). This is under the Technical tab. It is one of the simplest filters for finding stocks in uptrends. With this filter, stocks in a downtrend will be eliminated. Since we are looking at strong stocks in strong sectors, there is no need to waste time looking at stocks in the sector that aren’t performing well.
- Optional: Add in Price Above SMA50 for an additional trend filter (50-Day Simple Moving Average drop-down menu). This will only include stocks in short-term uptrends and/or above the average price of the last 50 days.
Now that you have applied a few basic filters, go through the following steps:
- Click the Performance button.
- Sort by Perf Half or Perf Year. Put the top performers at the top of the list (in descending order). This is going to rank all the stocks according to their stock price performance over the last 6-months or year.
- Once the sector list is sorted (descending) based on one of these time frames, then click Charts again.
- All the charts are still ranked by performance, with the top-performing ones for that timeframe at the top of the list.
- You can also change how the stocks are sorted using the “Order” drop-down at the top of the screen (in the screenshot below, it is set to Performance (Half year)).
- The charts can look a little squished because they are on Type: technical. To zoom in on more recent price action, change to Type: candle.
Our page now looks like this. I have circled the things you need to change based on the steps above (so you know where they are). The list is will regularly change as stocks become stronger or weaker. Each week I update the stocks I’m interested in on the Weekly Stock Watchlist.
Here’s a video demonstration on how to find the strongest stocks in the strongest sectors on Finviz. It also shows how we can see when money is starting to flow out of a sector.
Find Stocks that Match Your Strategies
You now have a filtered list of stocks in recent uptrends that are part of the strongest sector(s) currently in the market.
Visually browse through the first few pages of results looking for stocks that are forming patterns that meet your strategies or are forming potential trade triggers.
The first few pages are going to have the strongest stocks with the most momentum.
Finding Top Stocks in Top Sectors on StockCharts
If you prefer StockCharts.com, here’s how to find top sectors and stocks there.
- Go to Stockcharts.com.
- On the upper left, click on Charts & Tools
- Scroll down to Summary Pages and select Sector Summary (it is also listed along the right side of the page on desktop).
- For Period, select One Week.
- Sort by % CHG, descending, so the top sector is listed at the top.
- SCTR is a ranking based on multiple technical analysis inputs from different time frames. The closer to 100 the stronger the sector. Therefore, by looking at the SCTR ranking, you can see at a glance which sectors are also strong over the last one and three months.
- Click on the name of the top sector(s).
- This will bring up a list of Industries, or subcategories within the sector.
- Once again, focus your efforts on the top one to three Industries.
- Click on the name to bring up a list of stocks in that industry.
- The stocks will still be sorted by performance over the last week. The stocks at the top of the list have been strongest recently.
- Hovering your cursor over the Symbol will provide a small pop-up of the chart.
- Click on the little chart icon (second from left) to bring up a bigger chart. I usually right-click and open the chart in a new window/tab so I can keep the list open in the current browser tab.
StockRover: Finding the Strongest Stocks in the Strongest Sectors
Once you are logged into StockRover (you can set up an account for free) and you are on the research page, click on Markets under Today’s Market. It is on the left side.
On this page, you will see the Sectors listed. Pick from 1 or 5 day, 1 or 3 month, YTD, or 1-year performance.
Note the strongest sectors. If you want to incorporate them into a scan, open an existing scan and click Add Criteria. Enter “sector” in the search box. Click the box next to it, so there is a checkmark there. Click on the Sector criteria and click the little edit button. Select the sectors you want to scan for from the list. Only stocks matching the sectors you select will be included in the scan results.
Or you can start a new screen and just add in the sectors you want, via the same process as above. Create a scan, then Add Criteria, select Sector, and choose your sectors.
Sort the resulting list by performance to see the top stocks in that sector.
StockFetcher: How to Find the Strongest Stocks
Stockfetcher.com (the home page) shows how all their sectors are doing…scroll down to the bottom of the home page.
To see more timeframes click on View All Sectors just below the chart (takes you here:https://www.stockfetcher.com/ui2/plugins/sector4.php?full=1&mode=SECL). This gives you multiple time frames.
Click on the sector name to see all the stock charts within that sector. You’ll see some filter criteria at the top of the stock charts page. Add “ADD COLUMN ROC(63,1)” to see the stock’s performance over the last 3 months (63 days).
Sort that column to order the stocks from strongest to weakest over that time frame. If you are a member, you can go into your settings (under Account, upper right corner), click on My Filters and add global settings, such as price and volume requirements for the stocks that appear on the lists. Assuming your global filter is activated, it will apply to the stock lists of the sectors as well, so you will have fewer charts to look through (it will ignore low-volume or low-priced stocks, per your parameters).
You can also click on the little [+] next to the sector name to see all the industries within the group and which are performing best/worst.
Once again, click on an industry name if you want to see the stock charts within it.
Sort the sector/industry lists (strongest to weakest) by clicking the timeframe% at the top of the columns.
Finding the Weakest Stocks in the Weakest Sector
For shorting, I like to short stocks that are weak and falling.
To do this, basically, flip the screening process around. Look for the weakest sectors and weakest stocks within them.
I would only short stocks when overall market conditions are weak. Just like I only buy strong stocks when overall market conditions are good.
Incorporate Sector Analysis/Strength Into Any Stock Scan
Scanning for stocks in strong sectors can save time. Pull up the Groups on Finviz or the Sector Summary on StockCharts, and if most sectors aren’t performing well recently, then you know conditions are not very good for swing trading on the long side. But maybe there is one sector that IS performing well. That one sector is where you may deploy a small amount of capital while mostly sitting on the sidelines.
You can also run your normal stock scan, but add in a criterion that looks for stocks only in that top sector.
This could also be done when conditions are good for swing trading. If you don’t have a lot of time to scan through stocks, narrow down the list by focusing on hot sectors. This can often reduce the number of stocks on the scan list considerably. This saves time.
I run a scan for finding continuation patterns and cup and handle patterns. That scan looks for stocks that are stronger than average, so it does a pretty good job of highlighting stocks that are already in strong sectors. Although, there may be some stocks on the list that are strong on their own but not necessarily from a strong sector. By adding in sector criteria, those stocks may be eliminated from the list.
You don’t have to add sectors to your scan. It is just an option. Ideally, focus on one way of scanning and focus on one strategy until profitable.
Learn a complete method for swing trading stocks, revealed in step-by-step video format.
By Cory Mitchell, CMT
Disclaimer: Nothing in this article is personal investment advice, or advice to buy or sell anything. Trading is risky and can result in substantial losses, even more than deposited if using leverage.