WiserTrader Monthly

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September 2007                          Prescott, Arizona                     Contact Editor

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Contents

1.0 Leading Sectors and Industries

2.0 Industries Rising in Rank

3.0 Industries Falling in Rank

4.0 Lagging Industries

5.0 Top-Down Portfolio - new

Published the 3^rd Tuesday of the month

Industry Rankings for September

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Top down stock picking based on sector and industry rankings should be supplemented with additional fundamental and chart analysis.  Using a small amount of additional information, this issue begins building a new portfolio.

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1.0 Leading Sectors and Industries

     Sector and industry rankings are determined by the percent increase in industry index prices 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. 

     The leading sectors, based on their past month’s performance, are listed in Table 1A.

Table 1A

Sector Rank

Rank	Sector	1 Month
1	Basic Materials	13.9%
2	Energy	11.6%
3	Consumer Non-cyclical	8.1%
4	Conglomerates	7.1%
5	Transportation	6.7%
6	Utilities	6.0%
7	Technology	5.2%
8	Services	4.8%
9	Healthcare	3.7%
10	Financial	3.5%
11	Consumer Cyclical	3.3%
12	Industrial Goods	3.3%

     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.

     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.  It has been explained to Yahoo that index values should be recalculated as the 4^th root of the combined company market cap on each page access.  Yahoo has agreed to implement the solution but it may take some time.  Two leading industries having this problem are Beverages-Brewers and Wireless Communication.  A lagging industry having the problem is Diversified Communications Services.  These three industries should be discounted.

 Table 1B

Leading Industries

September 18, 2007

Rank [R]	Rank of Change   [C]	(R+C)/2	Industries	Companies	Last Gain	1 wk Ago Gain	1 mo Gain
1	7	4	Beverages - Brewers	C's	2.3%	36.1%	42.5%
2	56	29	Wireless Communications	C's	3.1%	19.9%	27.9%
3	10	7	Gold	C's	4.3%	5.7%	25.2%
4	11	8	Copper	C's	5.1%	8.4%	24.8%
5	96	51	Resorts & Casinos	C's	3.2%	9.6%	22.0%
6	20	13	Industrial Metals & Minerals	C's	6.2%	4.6%	20.4%
7	24	16	Major Airlines	C's	4.6%	2.3%	18.4%
8	82	45	Music & Video Stores	C's	5.0%	10.4%	17.6%
9	21	15	Oil & Gas Refining & Marketing	C's	3.7%	4.8%	17.0%
10	103	57	Sporting Goods Stores	C's	4.1%	6.7%	16.9%
11	79	45	Technical Services	C's	3.8%	6.0%	16.1%
12	62	37	Nonmetallic Mineral Mining	C's	3.5%	2.6%	15.8%
13	1	7	Silver	C's	3.0%	0.9%	14.7%
14	25	20	Independent Oil & Gas	C's	3.6%	5.8%	14.3%
15	28	22	Air Services, Other	C's	2.3%	2.6%	14.1%
16	87	52	Agricultural Chemicals	C's	3.1%	5.4%	14.0%
17	64	41	Oil & Gas Equipment & Services	C's	3.4%	3.6%	13.8%
18	46	32	Catalog & Mail Order Houses	C's	2.0%	3.7%	12.9%
19	123	71	REIT - Healthcare Facilities	C's	2.1%	6.5%	12.5%
20	39	30	Steel & Iron	C's	7.0%	-6.0%	12.1%
21	108	65	Dairy Products	C's	1.4%	0.2%	11.6%
22	26	24	Jewelry Stores	C's	4.1%	5.3%	11.4%
23	120	72	Internet Service Providers	C's	2.9%	6.0%	10.9%
24	137	81	Recreational Goods, Other	C's	4.2%	1.3%	10.7%
25	16	21	Closed-End Fund - Foreign	C's	2.8%	3.3%	10.7%
26	57	42	Personal Computers	C's	2.2%	2.9%	10.6%
27	34	31	Major Integrated Oil & Gas	C's	3.4%	4.5%	10.5%
28	30	29	Synthetics	C's	4.0%	4.6%	10.4%
29	14	22	Metal Fabrication	C's	6.0%	5.0%	10.4%
30	49	40	Broadcasting - Radio	C's	1.4%	2.0%	10.2%
31	53	42	Farm Products	C's	1.7%	0.6%	10.1%
32	65	49	Telecom Services - Foreign	C's	4.0%	4.0%	9.7%
33	36	35	Home Improvement Stores	C's	3.1%	4.9%	9.6%
34	45	40	Toys & Games	C's	3.2%	6.0%	9.5%
35	31	33	Foreign Utilities	C's	3.6%	3.3%	9.5%
36	71	54	Aluminum	C's	3.0%	3.0%	9.3%
37	22	30	Oil & Gas Drilling & Exploration	C's	2.7%	3.4%	9.3%
38	69	54	Communication Equipment	C's	3.8%	1.8%	9.3%
39	2	21	Housewares & Accessories	C's	4.5%	11.1%	9.1%
40	52	46	Electronics Stores	C's	4.8%	8.1%	9.1%

     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

September 18, 2007

Rank [R]	Rank of Change   [C]	(R+C)/2	Industries	Companies	Last Gain	1 wk Ago Gain	1 mo Gain
13	1	7	Silver	C's	3.0%	0.9%	14.7%
39	2	21	Housewares & Accessories	C's	4.5%	11.1%	9.1%
71	3	37	Toy & Hobby Stores	C's	5.9%	10.7%	6.3%
83	4	44	Publishing - Books	C's	5.5%	3.0%	5.8%
51	5	28	Foreign Money Center Banks	C's	5.7%	6.5%	7.8%
88	6	47	Regional Airlines	C's	3.6%	0.6%	5.2%
1	7	4	Beverages - Brewers	C's	2.3%	36.1%	42.5%
59	8	34	Basic Materials Wholesale	C's	3.2%	4.6%	7.3%
107	9	58	Real Estate Development	C's	5.3%	6.3%	4.3%
3	10	7	Gold	C's	4.3%	5.7%	25.2%
4	11	8	Copper	C's	5.1%	8.4%	24.8%
86	12	49	Auto Manufacturers - Major	C's	1.7%	3.0%	5.4%
103	13	58	Foreign Regional Banks	C's	5.5%	3.9%	4.5%
29	14	22	Metal Fabrication	C's	6.0%	5.0%	10.4%
89	15	52	Discount, Variety Stores	C's	3.6%	4.8%	5.1%
25	16	21	Closed-End Fund - Foreign	C's	2.8%	3.3%	10.7%
68	17	43	Electronic Equipment	C's	2.0%	1.7%	6.5%
55	18	37	Consumer Services	C's	2.7%	3.3%	7.5%
63	19	41	Investment Brokerage - National	C's	5.1%	7.0%	7.1%
6	20	13	Industrial Metals & Minerals	C's	6.2%	4.6%	20.4%
9	21	15	Oil & Gas Refining & Marketing	C's	3.7%	4.8%	17.0%
37	22	30	Oil & Gas Drilling & Exploration	C's	2.7%	3.4%	9.3%
72	23	48	Textile - Apparel Footwear & Accessories	C's	3.8%	4.8%	6.3%
7	24	16	Major Airlines	C's	4.6%	2.3%	18.4%
14	25	20	Independent Oil & Gas	C's	3.6%	5.8%	14.3%
22	26	24	Jewelry Stores	C's	4.1%	5.3%	11.4%
104	27	66	Railroads	C's	4.6%	5.3%	4.5%
15	28	22	Air Services, Other	C's	2.3%	2.6%	14.1%
70	29	50	Information & Delivery Services	C's	2.4%	4.3%	6.3%
28	30	29	Synthetics	C's	4.0%	4.6%	10.4%
35	31	33	Foreign Utilities	C's	3.6%	3.3%	9.5%
58	32	45	Paper & Paper Products	C's	2.9%	3.0%	7.3%
97	33	65	Farm & Construction Machinery	C's	4.4%	3.8%	4.8%
27	34	31	Major Integrated Oil & Gas	C's	3.4%	4.5%	10.5%
133	35	84	Textile - Apparel Clothing	C's	5.2%	4.8%	3.3%
33	36	35	Home Improvement Stores	C's	3.1%	4.9%	9.6%
92	37	65	Long-Term Care Facilities	C's	1.6%	0.8%	4.9%
62	38	50	Conglomerates	C's	3.5%	5.1%	7.1%
20	39	30	Steel & Iron	C's	7.0%	-6.0%	12.1%
93	40	67	Semiconductor- Memory Chips	C's	3.5%	-2.1%	4.8%

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

September 18, 2007

Rank [R]	Rank of Change   [C]	(R+C)/2	Industries	Companies	Last Gain	1 wk Ago Gain	1 mo Gain
155	176	166	Security & Protection Services	C's	3.1%	1.8%	2.5%
197	177	187	Rental & Leasing Services	C's	3.4%	0.0%	-0.9%
184	178	181	Specialty Retail, Other	C's	4.0%	3.3%	0.4%
168	179	174	Home Health Care	C's	1.8%	2.4%	2.0%
158	180	169	REIT - Hotel/Motel	C's	2.5%	3.5%	2.4%
195	181	188	Publishing - Newspapers	C's	1.2%	0.3%	-0.4%
108	182	145	Health Care Plans	C's	1.5%	2.5%	4.3%
200	183	192	Medical Practitioners	C's	1.5%	-0.5%	-1.3%
211	184	198	Sporting Goods	C's	1.9%	0.5%	-4.0%
186	185	186	Appliances	C's	2.4%	0.4%	0.3%
135	186	161	REIT - Diversified	C's	3.9%	5.2%	3.3%
136	187	162	Closed-End Fund - Debt	C's	1.5%	-0.2%	3.2%
203	188	196	Heavy Construction	C's	3.3%	4.0%	-1.8%
208	189	199	Trucking	C's	4.4%	3.2%	-3.1%
167	190	179	Confectioners	C's	2.1%	1.8%	2.0%
144	191	168	Cigarettes	C's	1.6%	1.2%	3.0%
138	192	165	Regional - Mid-Atlantic Banks	C's	3.9%	4.9%	3.2%
111	193	152	Diagnostic Substances	C's	1.0%	1.3%	4.1%
180	194	187	Healthcare Information Services	C's	2.1%	3.0%	1.0%
159	195	177	Industrial Equipment Wholesale	C's	3.9%	1.3%	2.4%
209	196	203	Wholesale, Other	C's	3.1%	-0.8%	-3.5%
201	197	199	Rubber & Plastics	C's	4.4%	2.5%	-1.5%
174	198	186	Regional - Midwest Banks	C's	4.5%	5.4%	1.3%
202	199	201	Insurance Brokers	C's	1.7%	-1.8%	-1.5%
151	200	176	Research Services	C's	2.2%	1.0%	2.8%
116	201	159	Data Storage Devices	C's	2.2%	-1.3%	4.0%
213	202	208	Office Supplies	C's	4.1%	2.7%	-7.4%
163	203	183	Money Center Banks	C's	4.2%	4.9%	2.2%
196	204	200	Semiconductor - Specialized	C's	4.0%	0.5%	-0.4%
171	205	188	Regional - Southeast Banks	C's	4.3%	4.3%	1.6%
172	206	189	REIT - Office	C's	3.2%	5.0%	1.6%
141	207	174	Savings & Loans	C's	3.9%	5.4%	3.1%
162	208	185	Meat Products	C's	-0.2%	-2.4%	2.2%
207	209	208	Drugs Wholesale	C's	2.3%	-1.9%	-2.8%
173	210	192	REIT - Residential	C's	2.6%	2.8%	1.5%
187	211	199	Regional - Pacific Banks	C's	3.6%	3.2%	0.2%
177	212	195	Management Services	C's	1.0%	-0.4%	1.1%
182	213	198	Property & Casualty Insurance	C's	2.5%	2.2%	0.8%
169	214	192	Regional - Southwest Banks	C's	4.2%	4.5%	1.9%
194	215	205	Food Wholesale	C's	2.5%	1.3%	-0.2%

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

September 18, 2007

Rank [R]	Rank of Change   [C]	(R+C)/2	Industries	Companies	Last Gain	1 wk Ago Gain	1 mo Gain
176	102	139	Marketing Services	C's	1.4%	-1.1%	1.1%
177	212	195	Management Services	C's	1.0%	-0.4%	1.1%
178	161	170	Auto Parts Stores	C's	4.4%	2.9%	1.1%
179	119	149	Department Stores	C's	5.7%	6.8%	1.1%
180	194	187	Healthcare Information Services	C's	2.1%	3.0%	1.0%
181	93	137	Cement	C's	5.7%	0.1%	0.9%
182	213	198	Property & Casualty Insurance	C's	2.5%	2.2%	0.8%
183	147	165	Advertising Agencies	C's	2.9%	-0.1%	0.6%
184	178	181	Specialty Retail, Other	C's	4.0%	3.3%	0.4%
185	101	143	Gaming Activities	C's	2.7%	3.5%	0.3%
186	185	186	Appliances	C's	2.4%	0.4%	0.3%
187	211	199	Regional - Pacific Banks	C's	3.6%	3.2%	0.2%
188	173	181	Air Delivery & Freight Services	C's	2.1%	1.9%	0.1%
189	167	178	Drugs - Generic	C's	2.2%	1.3%	0.1%
190	89	140	Hospitals	C's	2.1%	1.8%	0.0%
191	141	166	General Contractors	C's	3.9%	0.3%	-0.1%
192	129	161	Textile Industrial	C's	3.3%	2.8%	-0.2%
193	139	166	Information Technology Services	C's	1.9%	-0.4%	-0.2%
194	215	205	Food Wholesale	C's	2.5%	1.3%	-0.2%
195	181	188	Publishing - Newspapers	C's	1.2%	0.3%	-0.4%
196	204	200	Semiconductor - Specialized	C's	4.0%	0.5%	-0.4%
197	177	187	Rental & Leasing Services	C's	3.4%	0.0%	-0.9%
198	170	184	Home Furnishings & Fixtures	C's	2.2%	1.7%	-1.1%
199	100	150	Building Materials Wholesale	C's	6.6%	5.7%	-1.3%
200	183	192	Medical Practitioners	C's	1.5%	-0.5%	-1.3%
201	197	199	Rubber & Plastics	C's	4.4%	2.5%	-1.5%
202	199	201	Insurance Brokers	C's	1.7%	-1.8%	-1.5%
203	188	196	Heavy Construction	C's	3.3%	4.0%	-1.8%
204	140	172	Processing Systems & Products	C's	0.9%	-0.4%	-1.8%
205	152	179	Mortgage Investment	C's	4.8%	4.4%	-1.9%
206	121	164	Surety & Title Insurance	C's	6.4%	7.0%	-2.2%
207	209	208	Drugs Wholesale	C's	2.3%	-1.9%	-2.8%
208	189	199	Trucking	C's	4.4%	3.2%	-3.1%
209	196	203	Wholesale, Other	C's	3.1%	-0.8%	-3.5%
210	112	161	Residential Construction	C's	6.2%	11.1%	-3.6%
211	184	198	Sporting Goods	C's	1.9%	0.5%	-4.0%
212	174	193	Staffing & Outsourcing Services	C's	2.9%	0.1%	-5.7%
213	202	208	Office Supplies	C's	4.1%	2.7%	-7.4%
214	159	187	Recreational Vehicles	C's	3.8%	2.8%	-9.8%
215	111	163	Diversified Communication Services	C's	3.4%	5.5%	-28.4%

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 the “industries” spreadsheet and is obtained by clicking on the Excel Files link.  The industries spreadsheet gives you performance values for all 215 industries on a single page.  The “companies” spreadsheet, used to view performance of all the companies in an industry, is downloaded from the same web page.  XLQPlus is required. 

5.0 Top-Down Portfolio

     In this section we begin to build a top-down portfolio consisting of selected leading and emerging industries.  Stocks are selected, in part, based on their past month price performance that comes directly from the “companies” spreadsheet.  Also included are growth over the past year in market share, sales and earnings.  Data comes from a modified version of the “companies” spreadsheet that links to the AAII Stock Investor Pro database. 

     Ten industries ranked by the average of the two left-most columns are listed in Table 5A.  We will ignore Beverages-Brewers due to a suspicious large 1-day change in its index value.  Basic materials and energy sectors contain the majority of leading and emerging industries.  Focusing on these two commodity sectors, stock selections are limited to companies for which adequate information is available.  Excluded companies are traded mostly on over the counter exchanges. 

 Table 5A

Leading and Rising Industries

September 18, 2007

Sector	Rank [R]	Rank of Change   [C]	(R+C)/2	Industries	Companies	Last Gain	1 wk Ago Gain	1 mo Gain
Consumer Noncyclical	1	7	4	Beverages - Brewers	C's	2.3%	36.1%	42.5%
Basic Materials	3	10	7	Gold	C's	4.3%	5.7%	25.2%
Basic Materials	13	1	7	Silver	C's	3.0%	0.9%	14.7%
Basic Materials	4	11	8	Copper	C's	5.1%	8.4%	24.8%
Basic Materials	6	20	13	Industrial Metals & Minerals	C's	6.2%	4.6%	20.4%
Energy	9	21	15	Oil & Gas Refining & Marketing	C's	3.7%	4.8%	17.0%
Transportation	7	24	16	Major Airlines	C's	4.6%	2.3%	18.4%
Energy	14	25	20	Independent Oil & Gas	C's	3.6%	5.8%	14.3%
Consumer Cyclical	39	2	21	Housewares & Accessories	C's	4.5%	11.1%	9.1%
Financial	25	16	21	Closed-End Fund - Foreign	C's	2.8%	3.3%	10.7%

     In the gold industry, Lihir Gold Ltd. (LIHR) is ranked 9^th for the week and 4^th for the month.  It increased its share of the gold market over the past year from 1.1% to 3.4%.  Its sales growth increased 38% over that period and its profits grew by 64%.  IAMGOLD Corp. (IAG) is ranked only 18^th for the week and 29^th for the month.  It increased its share of the gold market from 1.1% to 2.4% over the past year.  Its sales growth increased 133% over that period and its profits grew by 289%.  These were the most outstanding stocks based on the above criteria.

     In the silver industry, Pan American Silver Corp. (PAAS) is ranked 6^th for the week and 3^rd for the month.  It had the highest increase in market share over the year, going from 27.7% to 33.2% of the silver market.  Sales growth increased 108.7% over that period and its profits grew by 268.9%.

     In the copper industry, Freeport-McMoRan Copper & Gold (FCX) is ranked 1^st for the week and 1^st for the month.  It had the highest increase in market share over the year, going from 31.8% to 61.4% of the copper market.  Sales growth increased 108.7% over that period and its profits grew by 41.3%.

     The industrial metals & minerals industry, like gold, has a much larger number of companies than adequate data can be found for.  BHP Billiton Ltd. (BHP) ranked 19^th for the week and 10^th for the month.  It had the highest increase in market share over the year, going from 52.7% to 59.8% of the industrial metals and minerals market.  Sales growth increased 20.3% over that period and its profits grew by 55%.

     In the oil & gas refining and marketing industry, Petroleo Brasileiro (PBR) ranked 12^th for the week and 2^nd for the month.  It had the highest increase in market share over the year, going from 13.9% to 15.2% of the oil & gas refining and marketing market.  Sales increased 28.4% over that period and its profits grew by 24%.

     In the independent oil and gas industry, China Petroleum & Chemical Cor (SNP) stands out with regard to market share among companies for which sales data are available.  The company ranked 65^th for the week and 12th for the month.  It had the highest increase in market share over the year, going from 54%% to 59.6% of the independent oil and gas market.  Sales increased 30.1% over that period and its profits grew by 21.4%.

     The 7 stocks selected are listed in Table 5B. 

Table 5B

New Top-Down Portfolio

September 18, 2007

Company	1 wk % Chg	1 mo % Chg	Mkt. Share Increase	Sales Growth	Earnings Growth
Lihir Gold Ltd. (LIHR)	9.6%	34.1%	2.3%	38.1%	64.7%
IAMGOLD Corp. (IAG)	1.6%	52.4%	1.3%	133.7%	288.9%
Pan American Silver Corp. (PAAS)	0%	20.4%	5.4%	108.7%	268.9%
Freeport-McMoRan Copper & Gold (FCX)	12.3%	29.2%	29.6%	38.6%	41.3%
BHP Billiton Ltd. (BHP)	5.0%	22.3%	7.1%	20.3%	55.0%
Petroleo Brasileiro (PBR)	6.5%	31.4%	1.2%	28.4%	24%
China Petroleum & Chemical Cor (SNP)	1.3%	16.9%	5.6%	30.1%	31.4%

     The stocks in Table 5B will be tracked for price performance and how well they maintain their market share, sales growth and earnings growth.  A 25% sell stop is suggested.  As time goes by, a more balanced diversified portfolio will evolve to include various classes of bonds (ETF’s) and about 5% real estate.  

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- Stock Lists -      Trade Candidates are selected for the Options Advisory based on custom filters with the aid of XLQPlus.  Stock lists (10 or more stocks) include the following 5 groups.   Weekly & Daily . . . · Up-trending stocks · Up-breakout stocks · Momentum Stocks · Down-trending stocks · Down-breakout stocks 3 months of weekly lists - $9.95 3 months of daily lists - $29.85 Filter Details Special requests for data and spreadsheet design are honored.

     Wave59 contains neural nets, price forecasting, and an amazing array of proprietary indicators.  Supports data feeds from eSignal, Interactive Brokers (requires account), IQFeed, and QCharts.

Stock-Signal-Pro Scans up to 5 watch lists of 100 stocks using predefined technical screens, flags which stocks are most favorable for market entry, provides entry price and charts, indicates strength of market direction and provides buy and sell signals.  Free historical database.