Every time a stock makes a significant move, it becomes the center of attention, and what usually follows is a scramble to find out which stock is going to move next.
A crucial aspect of this process is examining industry peers. Manually gathering the latest news, prices, and social chatter on every industry peer can take hours of valuable time, but MarketReader makes the process fast and simple.
What are Sympathy Movements?
When a stock experiences a significant move, it is often propelled by a catalyst such as a product launch, earnings report, an acquisition, or a change to the company’s business model. These events attract the attention of investors and analysts, driving the stock’s price up or down as market participants rush to seize the opportunity.
After that move, investors start to shift their focus towards identifying similar potential winners under the assumption that if one company’s stock rose due to a particular event, other businesses within the same industry might also benefit from similar circumstances. This is called a sympathy move.
Traders who capitalize on this correlation can position themselves strategically ahead of the move and find opportunities before the market catches on.
How to Use MarketReader to Identify Industry Peers
MarketReader includes the powerful function of automatically surfacing industry peers for a given asset. By simply selecting a ticker and clicking the “View Industry Peers” button, users are presented with a list of other assets in the same industry. This allows one to understand broad market moves across an entire industry sector at a glance.
For example, on July 31, Johnson & Johnson (JNJ)’s second bankruptcy attempt to address talc-related lawsuits was rejected, causing their stock price to move down by 4.2%.
By viewing J&J’s Industry Peers, users could quickly understand what is happening with other healthcare companies like Pfizer (PFE) and Eli Lilly (LLY). Through MarketReader, users can also assess correlation levels between these companies. For example, J&J and Pfizer have a correlation strength of 0.53, showing that their moves are influenced by each other.
Although Pfizer and Eli Lilly are not involved in Johnson & Johnson’s talc lawsuits, their stock price is still likely to be affected by the news.
Being able to stay ahead and easily monitor a company’s industry peers is what can separate a strong trader from a weak trader, and MarketReader makes that simple for our users.
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