Historical sector tendencies

When looking at sector one needs to look at some historical sector tendencies. Lot of people are attracted to wrong kind of sectors. Gold and silver is one classic example of it. Lot of gold bugs are not interested in making money. They are more interested in being part of the gold buying cult and have various absurd theories. They can keep wishing for gold standard, but in our lifetime the probability of that happening is low.

As per IBD study of biggest winners, drugs and medical, computer, technology, software, specialty retail, and leisure and entertainment groups have provided more big winners historically than other sectors. Industries like auto, steel, aluminum, airlines, railroads, copper and buildings are cyclical industries. They tend to make shorter runs when they make their moves. Only in very special conditions, these are likely to produce big winners. Shortages, price spikes, wars, infrastructure building phases are some circumstances under which these stocks can make big moves.

Some sectors make moves during bear markets because of the nature of their business. But they may not produce big winners.

Now this information is very useful , when we look at Episodic Pivot (EP) candidates or other candidates from IBD 200 or Double Trouble. Given a choice of EP's , it is better to go for stocks in sectors with historical tendencies of producing big winners.