A big part of sectoral screening etc is covered in the 52 week high and all time high thread. Essentially it involves trying to figure out strong tailwinds for a particular sector and if the stock prices of companies in that particular sector start making fresh 52 week highs or all time highs, it enhances the conviction.
In the current markets, the sectoral shifts happen very quickly. Within a couple of months we come across strength shown in one or two sectors and there are strong rallies in stocks from those sectors. I think the current flavour seems to be real estate. And here there is a combination of stocks breaking out of multiyear consolidations plus strong disbelief among investors regarding prospects of the sector. This is a very potent combination.
When a lot of stocks from same sector start making bullish patterns like flags, cup and handles, breakout past 52 week highs and all time highs post strong basing patterns, etc we should focus on those sectors and try to dig deeper. And if fundamentals and technicals gel, then try and short list few companies from that sector for investment.
We have seen strong sectoral moves in steel, sugar, chemicals, speciality chemicals, pharma etc. Currently as mentioned before, real estate seems to be in favour. Another sector undergoing strong rallies is textiles. So one can keep looking out for opportunities.
Its rare to see such a strong bull market with so many opportunities to ride strong rallies in individual stocks and sectors. These kind of bull markets come once in a decade or once in a few years. A lot of people keep questioning the rally and are fearful of investing citing a possible crash. But markets refuse to oblige them and keep going up inspite of all odds.
Whenever such bull markets end, its always painful. But the kind of wealth created if the opportunities provided by these kind of bull markets is utilised optimally, is beyond imagination.
In one of the Whatsapp groups where I am present, there are a few guys who are obsessed with daily levels of SGX nifty and are always on the lookout for meltdowns and Black Fridays and Black Mondays and what nots. If one has that kind of mindset, then its difficult to make decent money inspite of strong bull markets. One has to first accept that this is a bull market and then move ahead. End of bull markets, like end of life is inevitable. But one cannot live the present day in fear of things we cannot forecast and predict.