Hidy-ho, friends and fellow traders. How was your Wednesday? First of all, thanks for all the kind words regarding yesterday's edition of the newsletter, which explained the importance of thinking about sectors as you pick (or avoid) certain stocks. We're glad you liked it. And if you missed it, you may want to back-track and take a look - what you're about to read will make a lot more sense if you know what we're talking about. In any case, yesterday's chat brought up the inevitable follow-up question... which sectors are the ones poised to lead or lag from here? Surely you didn't think we'd give you a tool like that and then not give you the information needed to use it, did you? The thing is, we don't even really need to write up anything new on the sector matter, since we actually gave you the critical sector-based data (fundamental as well as technical) a couple of weeks ago when we dissected the most recent earnings outlooks. It was back on February 20th when we broke down 2015's earnings projections at the sector level, and then went on to look at sector valuations. We came to the conclusion that financial stocks and consumer discretionary stocks were stronger than the rest, while energy and materials - and utilities to some extent - were apt to spend this year and next year fighting an uphill battle. I also liked the technology and industrial sectors, though not as well as I liked financial and discretionary stocks. That outlook hasn't really changed in just the past three weeks. With all of that being said, we're going to drill down a little deeper into each sector today and look for some of the individual industries within specific sectors that are leading the charge. After all, the Bureau of Economic analysis going to get that detailed when they start to publish more specific GDP data beginning in April. We may as well start thinking in those detailed terms too. So... To be honest, I'm still tinkering with how I want to gather, interpret, and convey the industry-level data, but I did want to go ahead and get the information out to you so we can all start using it however it is we can best use it. I figure the best approach is just to put it in a table, and then sort it outt. Problem: With more than 200 industries, we run the risk of analysis-paralysis. Just for the sake of sanity, I'm going to limit our look to what I believe are the top 20 industries to own for the coming twelve months, based on a combination of factors. Here it is. Most of them jive with our favorite sectors we noted already, though there are a few interesting exceptions. As for what you're supposed to do with the information, the whole point of the exercise is to narrow the search for your next stock pick to these categories... a top-down approach rather than a ground-up approach. That's not to say you can't or shouldn't buy a stock outside of these groups. It is to say, however (knowing what we know about sector influence), you want to make sure you have several of these sectors and industries represented in your portfolio before taking on more speculative ideas. [Interestingly, though not surprisingly, most of the open trades we have in the hypothetical portfolio fit into one of the 20 industries listed above.] My ultimate plan here is to start making picks in the newsletter that specifically come from these industries and sectors. I'm not going to be able to make such a pick today, however. Do you know who's the best at thinking along sector, industry, and "theme" lines to pick stocks though? The guys over at the SmallCap Network Elite Opportunity. I don't want to give away too many details about the SCN EO's current portfolio, because it wouldn't be fair to current Elite Opportunity subscribers. But, I can tell you that two of the SmallCap Network's seven open trades right now were selected largely because of the industry they operate within. One of them is up 27% since mid-November, so it looks like John Monroe's application of the industry or "theme" idea is paying off. And, it's not unusual for the SCN EO to have two or three industry-based trades in play at any given time... with most of them working out quite well. If you'd like to see a real professional connect the proverbial dots between an industry trend and the broad market's undertow and the tricky nuances of getting in and out of a position at the ideal time, the Elite Opportunity team members are masters at the art. Check it out for yourself using their free two-week test drive offer. Here's how, or cut and paste this link: https://www.smallcapnetwork.com/pages/SCNEO/v1/ Portfolio Update Speaking of stock picks, although the market was only a mediocre performer today, most of our seven picks ended Wednesday's session in the black. That's the power of picking stocks with well-supported momentum...they can usually overcome a marketwide bearish tide. Astec Industries (ASTE) was a particularly strong mover today, up around 1.6% near print-time. Astec isn't the pick we wanted to talk about, however. No, the only ticker worth a closer look today is PICO Holdings (PICO). Today was the fourth day in the last seven trading days that PICO has put some serious pressure on a ceiling at $26.40. The persistence is uncanny. Eventually the stock will break through, and when it does, that's when the real fireworks can begin. The kicker is how we saw strong volume behind today's buying. You just get the feeling there are a lot of bulls waiting in the wings. It's also worth noting that Cooper Industries (COO) hammered out a nice bullish reversal on Wednesday after getting well overheated and starting to pull back last Friday. If we can just get some follow-through tomorrow, that bounce should be cemented into place. I don't have room to show you a chart of Cooper here, but if you have your charting service handy when you read this, you might want to take a look. The volume behind the bounce was pretty firm as well. As for the whole portfolio, this is what we've got as of today. Amazingly enough, there's still hasn't been any real news from - or about - any of our current holdings, save one.... Genesco (GCO). It's going to release last quarter's results tomorrow morning. We got into Genesco knowing this was in the lineup, wanting to take on the risk-versus-reward proposition. We'll see how it goes. Zzzzz You don't need me to tell you Wednesday was a fairly uninteresting day for the market. Yes, all the major indices fell back and then pushed off their lows for the day, getting back to break-even levels. But, the volume behind the hammer-shaped reversal bars was quite thin - just like Monday and Tuesday. If today was really going to be a pivot out of a pullback and back into an uptrend, we should have seen a ton of volume behind the dragonfly doji-shaped day. The only thing we can safely glean from today's and this week's action is, most traders are still on the sidelines, waiting for something worth trading to happen. I honestly don't think now's the time to be making any kind of major call on the market. There are those who will suggest today's bullish whipsaw and the VIX's brush of - and pullback from - its upper Bollinger band at 15.50 means the tide has turned a tad bullish again. And truth be told, it's not an entirely bad argument. I just feel the better argument right now is the stagnation one, with a lack of volume underscoring how nobody has any real conviction at this point. For what it's worth, the volume behind the NASDAQ's bounce was lackluster, while the volume behind the Dow's mid-day reversal was pretty tepid too. The good news is, the market's unwillingness to move won't prevent the hottest and coldest stocks from moving nicely. And, we just happen to own a few of those hot stocks in our pretend portfolio. There's a chance we could add another pick to the list later on this week.