Understanding sector tiers: leaders Vs followers - Trading-Lab

rookie · #1 09-10-2007, 02:41 PM

I've been researching sector strategies and understand a lot of traders base their trading decisions on sectors behavior. Specifically, I've been studying sector leaders - Tier 1 stocks - and sector followers - Tier 2, 3 stocks.

Some traders only concentrate on sector leaders which are supposed to be driving the whole sector up or down and should be bought/shorted accordingly. Others prefer to stick to Tier 2 stocks and take advantage of their "delayed reaction".

but how do I know exactly which stock is a sector leader and which one is a sector lagger? Is it possible that a stock which used to be a leader now becomes a follower? Also, do you know of a site which let's you compare a stock performance to its sector's? thanks

TapeReader · #2 09-11-2007, 01:53 PM

Tier 2 stocks are generally lower float stocks which tend to show a delayed reaction behavior compared to their sector leaders (Tier 1 stocks). The reason for this is that the lower float of these stocks causes larger moves in Tier 2 stocks than in Tier 1 stocks.

breakout · #3 09-19-2007, 08:39 AM

a good site to get sector stocks lists is http://www.bullsector.com/. Couple that with http://market-topology.com/ and you should be on your way to a good understanding of how to find out which stock belong to which tier.

rookie · #4 09-20-2007, 01:54 PM

thanks everybody for your explanation. But I'm still a bit puzzled as to why a lower float affects how much a stock moves. Also, how I find out which stock is a Tier 1 or Tier 2? Do I figure that out just by observing stock behavior day in day out or?

ChaosTheory · #5 09-28-2007, 01:38 PM

first of all, let's define what float is: float or free float is the total number of shares available for public trading. You arrive at the float figure by subtracting restricted shares from total outstanding shares. Stocks with lower floats tend to be more volatile as less money is needed to move them in relative terms.

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#1 09-10-2007, 02:41 PM
rookie Member Join Date: Jul 2007 Posts: 86	Understanding sector tiers: leaders Vs followers I've been researching sector strategies and understand a lot of traders base their trading decisions on sectors behavior. Specifically, I've been studying sector leaders - Tier 1 stocks - and sector followers - Tier 2, 3 stocks. Some traders only concentrate on sector leaders which are supposed to be driving the whole sector up or down and should be bought/shorted accordingly. Others prefer to stick to Tier 2 stocks and take advantage of their "delayed reaction". but how do I know exactly which stock is a sector leader and which one is a sector lagger? Is it possible that a stock which used to be a leader now becomes a follower? Also, do you know of a site which let's you compare a stock performance to its sector's? thanks

#2 09-11-2007, 01:53 PM
TapeReader Member Join Date: Jun 2007 Posts: 37	Tier 2 stocks are generally lower float stocks which tend to show a delayed reaction behavior compared to their sector leaders (Tier 1 stocks). The reason for this is that the lower float of these stocks causes larger moves in Tier 2 stocks than in Tier 1 stocks. __________________ A lonely trader

#3 09-19-2007, 08:39 AM
breakout Member Join Date: Jun 2007 Posts: 63	a good site to get sector stocks lists is http://www.bullsector.com/. Couple that with http://market-topology.com/ and you should be on your way to a good understanding of how to find out which stock belong to which tier.

#4 09-20-2007, 01:54 PM
rookie Member Join Date: Jul 2007 Posts: 86	thanks everybody for your explanation. But I'm still a bit puzzled as to why a lower float affects how much a stock moves. Also, how I find out which stock is a Tier 1 or Tier 2? Do I figure that out just by observing stock behavior day in day out or?

#5 09-28-2007, 01:38 PM
ChaosTheory Member Join Date: Jul 2007 Posts: 44	first of all, let's define what float is: float or free float is the total number of shares available for public trading. You arrive at the float figure by subtracting restricted shares from total outstanding shares. Stocks with lower floats tend to be more volatile as less money is needed to move them in relative terms.