#Sectorbreadth

A regular feature of my Stocktwits and Twitter feed is my #sectorbreadth posts.


Sectorbreadth is a measure of the technical strength of component stocks within each S&P SPDR ETF.  Technical strength is derived from the volume, trend, and momentum indicators for each stock.  The percentage score relates to the total of stocks within each ETF on a 'buy' signal. 

When more than 90% of component ETF stocks are on a 'buy' signal I consider the sector overbought - and the ETF or component stocks worthy of some profit taking (or a covered call strategy).

When fewer than 10% of component ETF stocks are on a 'buy' signal I consider the sector oversold - and the ETF or component stocks worthy of accumulation or a long trade. 

I track these trades in my premium Stocktwits room ($149/month with the coupon code fallondpicks).  Below is a chart showing how this strategy plays out:


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Investments are held in a pension fund on a buy-and-hold strategy.

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