Trading tools: Colorful stock market heat maps help traders

For short and medium term oriented traders, heat maps are invaluable tools for gauging daily market sentiment as well as finding good buy and sell points.

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Heat mapping follows daily stock market gyrations. (Illustration is a screen capture of a heart chart made available via FinViz.com)

WASHINGTON, January 24, 2017 – As we’ve already noted in our companion column,

“The heroes behind Tuesday’s [today’s] currently super-sized plus [market] move in are stocks of companies lumped together under the sector category “Materials.” While materials include things like lumber and paper, they also involve key construction metals and “base metals” such as copper, tin, lead, aluminum and iron—stuff you use to make other stuff you can sell to people. Fuels are also included in this general category.”

If you gather more raw materials, you use them to make even more stuff, assuming, based on your own internal research, that more people are now willing to buy more stuff. CEOs and CFOs can’t get this wrong, or their companies will get flattened when they release their company’s next quarterly earnings. Hence, corporate actions like this are important to note.

But how do you follow the action in sectors and individual stocks?



Read also: Tuesday markets: Materials, builders go wild


You can watch the daily action in the FinViz “heat map,” a current copy of which appears atop this article. This live, continuously updated heat map is available in the upper right corner of the FinViz home page. By clicking on this image, you’ll get a larger, interactive map, which, as you can see in our screen grab version above, lists key stocks by key sectors.

Perhaps paradoxically, the “heat”—the current hot stocks and sectors at any given time—are designated by light-to-darker shades of green, while the colder (negative) stocks and sectors are highlighted in red. In other words, green-to-intensely bright green stocks and sectors are being bought, while red or intensely red stocks and sectors are being sold. Hot is green, red is cold. If you scroll over the map, you’ll get even more information on the individual stocks in each area including current moves and a tiny short term chart of recent action.

As you can see on the map above and on the live site, at least as of this afternoon, materials stocks and the financial sector are seriously in their happy place.

The only sector that’s getting badly clipped today is the pharmaceutical/healthcare sector. With the president crusading as vigorously against the hated Obamacare as he is crusading in favor of exploiting natural resources and building things, it’s not difficult to see why pharmaceuticals are dull to bright red on the FinViz heat map Tuesday.

High drug prices—and the fact that pharma companies, pharmacies, hospital chains and health insurance companies—colluded with Obama and his all-Democrat House and Senate to build “Obamacare” has, at least for now, put the pharma stocks in particular in Trump’s gun sights. Fearing a substantial risk to future profitability, investors are currently fleeing the sector, which is why it’s currently glowing an angry red on our heat map.

Trading diary

We’ve vowed to try to get back into action this week, after last weeks meandering and largely negative market action.

We’re happy with our position in copper and gold miner Freeport-McMoRan (symbol: FCX), and, in fact, doubled our position yesterday. We’re currently up over 11 percent in this issue and are holding for now. We’d put a stop order underneath it, but it’s too volatile for that, and we could get stopped out in a short-term panic in this sector.

We’ve actually been adding, little by little, to our position in RYH, the Guggenheim Equal Weight S&P 500 tracking ETF. Once some resolution to the pharma issue is reached with the White House, these traditionally profitable high dividend payers should take off and never look back. True, right now they look pretty miserable, but when the fog lifts, they’ll do just fine, meaning we can buy them—or the ETF—at depressed prices, always a good tactic.

We’ve also taken a chance on drug maker Merck (MRK), which, at least in the near term, should do better than most of the rest.

Lest we forget our large position in Allergan Convertible Preferred A shares (AGN/PRA, your symbol may vary), we got a pair of huge up-moves last week, although we’re still down 3.3 percent at the moment. It’s a proxy for the Allergan common (AGN) and we have enough of it already, so we’re holding for now.

We continue to add to our small positions in a pair of gold and silver ETFs we can trade for zero commission at our brokerage, namely SGOL and SIVR, respectively.

That’s it for today. Fingers crossed. If the market next intends to break through resistance, we’ll probably know shortly. We hope it does, but you never know.

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Terry Ponick
Biographical Note: Dateline Award-winning music and theater critic for The Connection Newspapers and the Reston-Fairfax Times, Terry was the music critic for the Washington Times print edition (1994-2010) and online Communities (2010-2014). Since 2014, he has been the Business and Entertainment Editor for Communities Digital News (CDN). A former stockbroker and a writer and editor with many interests, he served as editor under contract from the White House Office of Science and Technology Policy (OSTP) and continues to write on science and business topics. He is a graduate of Georgetown University (BA, MA) and the University of South Carolina where he was awarded a Ph.D. in English and American Literature and co-founded one of the earliest Writing Labs in the country. Twitter: @terryp17