October 2007 Newsletter

WiserTrader Industries Monthly

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October 2007 Prescott, Arizona Contact Editor

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Contents

Leading Sectors and Industries
Industries Rising in Rank
Industries Falling in Rank
Lagging Industries
Top-Down Portfolio 22% profit on open positions
Portfolio Sell Stop Settings

Published the 3^rd Tuesday of the month Subscription is free.

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The new top-down stock portfolio got off to a good start. Now a month old, more selections can be added while attempting to achieve a more balanced asset allocation. Criteria for choosing stocks are quite simple. We look for leading industries in leading sectors and find stocks that show growth in market share, earnings and sales.

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1.0 Leading Sectors and Industries for October

Sector and industry rankings are normally determined by the percent increase in industry composite index values over the previous 4 weeks. Industry rank ranges from a high of 1 to a low of 215 based on a list of 215 industries in the Yahoo Finance industry classification system.

We have commented before that a 1-day change of 15% or more in an industry’s index value can be caused by splits, mergers or acquisitions. Yahoo is aware of the problem. Two leading industries having this problem now are Independent Oil and Gas and Auto Parts. So I have decided to rank sectors based on the average of their industry rankings to damp out the effects of noise in the data.

Sectors rankings based on the average of their industry rankings are listed in Table 1A.

Table 1A

Sector Rank

Rank	Sector	Average Industry Rank
1	Basic Materials	38
2	Technology	78
3	Consumer Noncyclical	90
4	Energy	90
5	Transportation	97
6	Industrial Goods	108
7	Services	121
8	Healthcare	121
9	Utilities	121
10	Financial	124
11	Consumer Cyclical	137
12	Conglomerates	147

The leading industries for the past month are ranked in Table 1B. The leftmost column is the rank based on the previous 4-week percentage change. The second column from the left is ranked by the number of positions an industry is above or below its 4-week average rank. The third column from the left is the average of the first two columns. Clicking on the industry name takes you to an industry summary page. The “C’s” will display the companies in the industry. The last three columns on the right are the percentage gains for the previous trading day, the previous week and the previous four weeks.

Table 1B

Leading Industries

October 16, 2007

Rank [R]	Rank of Change [C]	(R+C)/2	Industries	Companies	Last Gain	1 wk Ago Gain	1 mo Gain
1	92	47	Nonmetallic Mineral Mining	C's	1.7%	-0.7%	19.0%
2	100	51	Industrial Metals & Minerals	C's	-1.5%	0.5%	15.8%
3	61	32	Personal Computers	C's	0.7%	0.6%	14.4%
4	30	17	Education & Training Services	C's	0.8%	2.9%	14.1%
5	91	48	Internet Information Providers	C's	-1.4%	-1.1%	13.8%
6	114	60	Copper	C's	-2.6%	1.5%	13.8%
7	21	14	Diversified Investments	C's	-2.1%	4.3%	13.7%
8	69	39	Basic Materials Wholesale	C's	-1.7%	1.2%	13.0%
9	2	6	Heavy Construction	C's	-1.9%	1.1%	12.4%
10	14	12	Data Storage Devices	C's	-1.2%	1.4%	11.8%
11	64	38	Business Software & Services	C's	-0.7%	-1.4%	11.7%
12	101	57	Agricultural Chemicals	C's	-0.3%	1.7%	11.5%
13	95	54	Foreign Money Center Banks	C's	-5.1%	-12.3%	10.6%
14	35	25	Drug Delivery	C's	-1.6%	0.4%	10.4%
15	45	30	Computer Peripherals	C's	-1.2%	-0.6%	10.4%
16	98	57	Silver	C's	-2.9%	1.6%	10.2%
17	53	35	Major Integrated Oil & Gas	C's	-0.1%	6.8%	9.9%
18	43	31	Steel & Iron	C's	-2.9%	-2.4%	9.8%
19	82	51	Telecom Services - Foreign	C's	-0.5%	3.0%	9.7%
20	130	75	Music & Video Stores	C's	0.4%	1.5%	9.6%
21	124	73	Technical Services	C's	-1.5%	0.1%	9.6%
22	23	23	Security Software & Services	C's	-0.9%	-1.5%	8.9%
23	46	35	Shipping	C's	-1.4%	-0.5%	8.7%
24	26	25	Wireless Communications	C's	-0.6%	1.0%	8.5%
25	127	76	Gold	C's	-1.3%	3.6%	7.9%
26	34	30	Farm Products	C's	1.2%	2.6%	7.9%
27	1	14	Long Distance Carriers	C's	1.1%	1.2%	7.0%
28	68	48	Asset Management	C's	-1.6%	-2.9%	6.9%
29	25	27	Business Services	C's	-0.8%	-2.3%	6.6%
30	32	31	Beverages - Brewers	C's	-1.2%	-2.6%	6.6%
31	20	26	Rubber & Plastics	C's	-0.5%	-1.0%	6.4%
32	59	46	Internet Software & Services	C's	0.1%	-0.9%	6.3%
33	90	62	Industrial Electrical Equipment	C's	-1.0%	-1.3%	6.3%
34	22	28	Air Services, Other	C's	0.7%	4.8%	6.3%
35	118	77	Life Insurance	C's	-1.3%	-3.3%	6.3%
36	56	46	Aerospace/Defense Products & Services	C's	-0.1%	-0.9%	6.2%
37	117	77	Multimedia & Graphics Software	C's	-1.5%	-2.1%	5.9%
38	24	31	Healthcare Information Services	C's	-0.4%	-0.2%	5.8%
39	128	84	Diversified Communication Services	C's	-0.4%	-2.0%	5.8%
40	78	59	Oil & Gas Refining & Marketing	C's	-0.2%	3.2%	5.7%

The top 20 leading industries are plotted in Figure 1.

FIGURE 1

2.0 Industries Rising in Rank

Table 2A contains the industries that are moving up in position the fastest. The 20 fastest rising in rank are plotted in Figure 2.

Table 2A

Industries Advancing in Rank the Fastest

October 16, 2007

Rank [R]	Rank of Change [C]	(R+C)/2	Industries	Companies	Last Gain	1 wk Ago Gain	1 mo Gain
27	1	14	Long Distance Carriers	C's	1.1%	1.2%	7.0%
9	2	6	Heavy Construction	C's	-1.9%	1.1%	12.4%
47	3	25	Management Services	C's	-0.2%	-0.2%	4.8%
53	4	29	Recreational Vehicles	C's	-0.9%	-3.0%	4.2%
54	5	30	Semiconductor - Specialized	C's	0.1%	-0.9%	4.1%
46	6	26	Advertising Agencies	C's	-1.8%	-1.9%	5.0%
45	7	26	Industrial Equipment Wholesale	C's	-0.9%	-1.4%	5.2%
89	8	49	Meat Products	C's	-1.2%	-4.0%	2.6%
78	9	44	Marketing Services	C's	-1.3%	-1.7%	3.2%
61	10	36	Information Technology Services	C's	-1.5%	-2.0%	3.9%
66	11	39	Cigarettes	C's	0.4%	1.3%	3.6%
56	12	34	Regional Airlines	C's	-1.2%	-0.6%	4.1%
68	13	41	Tobacco Products, Other	C's	-0.2%	2.6%	3.5%
10	14	12	Data Storage Devices	C's	-1.2%	1.4%	11.8%
121	15	68	Staffing & Outsourcing Services	C's	0.4%	-1.4%	1.2%
85	16	51	Oil & Gas Pipelines	C's	-0.2%	1.2%	2.7%
111	17	64	Insurance Brokers	C's	-0.7%	-2.3%	1.7%
106	18	62	General Contractors	C's	-0.9%	-1.4%	1.8%
128	19	74	Drugs Wholesale	C's	-0.7%	-1.9%	0.8%
31	20	26	Rubber & Plastics	C's	-0.5%	-1.0%	6.4%
7	21	14	Diversified Investments	C's	-2.1%	4.3%	13.7%
35	22	29	Air Services, Other	C's	0.7%	4.8%	6.3%
22	23	23	Security Software & Services	C's	-0.9%	-1.5%	8.9%
29	24	27	Business Services	C's	-0.8%	-2.3%	6.6%
24	25	25	Wireless Communications	C's	-0.6%	1.0%	8.5%
39	26	33	Healthcare Information Services	C's	-0.4%	-0.2%	5.8%
135	27	81	Publishing - Newspapers	C's	0.7%	-0.7%	0.5%
94	28	61	Lodging	C's	1.0%	-0.7%	2.3%
4	30	17	Education & Training Services	C's	0.8%	2.9%	14.1%
58	29	44	Research Services	C's	-0.2%	-1.4%	4.0%
91	31	61	Cement	C's	-1.7%	-5.1%	2.5%
30	32	31	Beverages - Brewers	C's	-1.2%	-2.6%	6.6%
64	33	49	Security & Protection Services	C's	0.2%	-1.1%	3.6%
26	34	30	Farm Products	C's	1.2%	2.6%	7.9%
14	35	25	Drug Delivery	C's	-1.6%	0.4%	10.4%
86	36	61	Diversified Computer Systems	C's	0.7%	-0.2%	2.7%
92	37	65	Grocery Stores	C's	-0.5%	-0.6%	2.5%
142	38	90	CATV Systems	C's	0.1%	-0.7%	0.0%
80	39	60	Property & Casualty Insurance	C's	-0.6%	-1.6%	3.1%
65	40	53	Electronics Wholesale	C's	-0.7%	-1.1%	3.6%

FIGURE 2

3.0 Industries Falling in Rank

A list of the industries declining in rank the fastest is given in Table 3A. The 20 fastest declining in rank are plotted in Figure 3.

Table 3A

Industries Declining in Rank the Fastest

October 16, 2007

Rank [R]	Rank of Change [C]	(R+C)/2	Industries	Companies	Last Gain	1 wk Ago Gain	1 mo Gain
209	176	193	Savings & Loans	C's	-2.0%	-6.3%	-8.0%
108	177	143	Restaurants	C's	0.0%	-3.1%	1.7%
200	178	189	Real Estate Development	C's	-2.6%	-6.1%	-6.5%
57	179	118	Resorts & Casinos	C's	-0.4%	-1.8%	4.0%
163	180	172	Medical Appliances & Equipment	C's	0.0%	-5.0%	-1.4%
212	181	197	Trucks & Other Vehicles	C's	-1.6%	-13.4%	-10.1%
166	182	174	Credit Services	C's	-2.1%	-5.5%	-1.8%
173	183	178	Paper & Paper Products	C's	-0.8%	-5.3%	-2.2%
152	184	168	Electronic Equipment	C's	-1.2%	-3.9%	-0.6%
193	185	189	Mortgage Investment	C's	-1.8%	-6.3%	-4.5%
168	186	177	Railroads	C's	-1.5%	-3.9%	-2.0%
195	187	191	Textile - Apparel Clothing	C's	-0.3%	-3.3%	-5.0%
205	188	197	Regional - Mid-Atlantic Banks	C's	-2.1%	-6.2%	-6.8%
129	189	159	Recreational Goods, Other	C's	1.1%	-1.0%	0.7%
188	190	189	Department Stores	C's	-1.4%	-5.3%	-3.7%
77	192	135	Metal Fabrication	C's	-0.7%	-4.2%	3.2%
103	191	147	Investment Brokerage - National	C's	-1.3%	-4.9%	2.0%
125	193	159	Foreign Utilities	C's	-0.9%	-0.8%	1.1%
180	194	187	Lumber, Wood Production	C's	-2.2%	-5.4%	-3.1%
175	195	185	Industrial Equipment & Components	C's	-0.5%	-2.5%	-2.5%
141	196	169	Diversified Electronics	C's	-0.8%	-3.6%	0.0%
96	197	147	Synthetics	C's	-1.6%	-3.3%	2.2%
104	198	151	Catalog & Mail Order Houses	C's	-0.9%	-2.7%	1.9%
162	199	181	REIT - Residential	C's	-1.6%	-5.6%	-1.3%
140	200	170	Technical & System Software	C's	-2.6%	-6.1%	0.1%
191	201	196	Money Center Banks	C's	-2.5%	-4.9%	-4.1%
107	202	155	Independent Oil & Gas	C's	-6.8%	17.8%	148.1%
154	203	179	Aerospace/Defense - Major Diversified	C's	0.8%	-3.7%	-0.7%
174	204	189	Auto Parts Wholesale	C's	-0.5%	-2.1%	-2.3%
147	205	176	Conglomerates	C's	-0.3%	-2.2%	-0.3%
184	206	195	Surety & Title Insurance	C's	-2.7%	-6.9%	-3.2%
183	207	195	REIT - Diversified	C's	-1.5%	-5.7%	-3.2%
171	208	190	Toy & Hobby Stores	C's	-1.3%	-2.0%	-2.1%
213	209	211	Sporting Goods Stores	C's	-2.1%	-3.2%	-10.8%
119	210	165	REIT - Retail	C's	-1.4%	-5.6%	1.3%
198	211	205	Consumer Services	C's	-0.4%	-5.8%	-6.0%
157	212	185	Toys & Games	C's	-0.4%	-2.7%	-0.8%
156	213	185	Communication Equipment	C's	-4.9%	-5.1%	-0.8%
208	214	211	Oil & Gas Drilling & Exploration	C's	-0.2%	-8.0%	-7.9%
172	215	194	Housewares & Accessories	C's	-0.5%	-3.4%	-2.1%

FIGURE 3

4.0 Lagging Industries

Lagging industries for the past month are listed in Table 4A. A chart showing the rank performance of the 20 worst ranked is shown in Figure 4.

Table 4A

Lagging Industries

October 16, 2007

Rank [R]	Rank of Change [C]	(R+C)/2	Industries	Companies	Last Gain	1 wk Ago Gain	1 mo Gain
176	171	174	Printed Circuit Boards	C's	0.2%	-0.1%	-2.5%
177	145	161	Office Supplies	C's	-1.3%	-7.5%	-2.6%
178	107	143	Specialty Eateries	C's	-0.2%	-1.8%	-2.6%
179	110	145	Home Furnishings & Fixtures	C's	-1.1%	-4.0%	-3.0%
180	57	119	Wholesale, Other	C's	-0.7%	-3.4%	-3.1%
182	116	149	Gaming Activities	C's	-0.3%	-5.2%	-3.1%
181	196	189	Lumber, Wood Production	C's	-2.2%	-5.4%	-3.1%
183	207	195	REIT - Diversified	C's	-1.5%	-5.7%	-3.2%
184	206	195	Surety & Title Insurance	C's	-2.7%	-6.9%	-3.2%
185	96	141	Textile Industrial	C's	-0.5%	-1.8%	-3.2%
186	147	167	Water Utilities	C's	-0.4%	-3.7%	-3.4%
187	146	167	Drug Stores	C's	-0.4%	0.0%	-3.6%
188	190	189	Department Stores	C's	-1.4%	-5.3%	-3.7%
189	162	176	Home Furnishing Stores	C's	-0.5%	-3.8%	-3.8%
190	159	175	Regional - Southwest Banks	C's	-1.2%	-4.0%	-4.0%
191	201	196	Money Center Banks	C's	-2.5%	-4.9%	-4.1%
192	113	153	Semiconductor- Memory Chips	C's	-1.2%	-3.9%	-4.5%
193	76	135	Sporting Goods	C's	-0.9%	-3.8%	-4.5%
194	187	191	Mortgage Investment	C's	-1.8%	-6.3%	-4.5%
195	186	191	Textile - Apparel Clothing	C's	-0.3%	-3.3%	-5.0%
196	136	166	Photographic Equipment & Supplies	C's	-2.5%	-6.8%	-5.3%
197	175	186	Regional - Midwest Banks	C's	-1.7%	-5.3%	-5.6%
198	211	205	Consumer Services	C's	-0.4%	-5.8%	-6.0%
199	131	165	Auto Dealerships	C's	-0.7%	-3.9%	-6.2%
200	177	189	Real Estate Development	C's	-2.6%	-6.1%	-6.5%
201	166	184	Building Materials Wholesale	C's	-1.4%	-5.5%	-6.5%
202	157	180	Regional - Pacific Banks	C's	-2.2%	-6.6%	-6.5%
203	170	187	Home Health Care	C's	-1.6%	-5.8%	-6.5%
204	94	149	Trucking	C's	-0.9%	-2.7%	-6.7%
205	188	197	Regional - Mid-Atlantic Banks	C's	-2.1%	-6.2%	-6.8%
206	164	185	Apparel Stores	C's	-1.7%	-4.3%	-6.9%
207	93	150	Medical Practitioners	C's	-1.6%	0.2%	-7.2%
208	214	211	Oil & Gas Drilling & Exploration	C's	-0.2%	-8.0%	-7.9%
209	176	193	Savings & Loans	C's	-2.0%	-6.3%	-8.0%
210	150	180	Hospitals	C's	-1.9%	-5.4%	-8.2%
211	148	180	Regional - Southeast Banks	C's	-2.0%	-6.6%	-9.7%
212	181	197	Trucks & Other Vehicles	C's	-1.6%	-13.4%	-10.1%
213	209	211	Sporting Goods Stores	C's	-2.1%	-3.2%	-10.8%
214	141	178	Home Improvement Stores	C's	-1.5%	-4.0%	-11.6%
215	165	190	Residential Construction	C's	-3.7%	-8.7%	-13.1%

FIGURE 4

It is important to remember that the usefulness of industry ranking depends on how each industry is actually performing. When the market performs poorly, the leading industry could very well be the one that declines the least. An industry could be doing nothing price wise but could end up near the top or bottom of the ranking list because other industries might be doing extremely poorly or well. There is not enough information in an industry’s ranking list alone to infer how the industry index has actually changed over time. There is no substitute for looking at the actual percentage change of an index for the industry of interest.

Industries ranked according to how much their rank positions have changed from their average is a strong indicator of future industry leadership. This indicator also confirms how well a leading industry is maintaining its position.

The spreadsheet from which the charts and tables were obtained is available as a free download. It is named