If the stock market can move sectors and stocks, which sectors and stocks are most likely to move in step with the stock market? Sectors and individual stocks most highly correlated to the overall market can use the S&P 500 SPDR ETF (SPY) as a directional indicator.

The following sectors are most correlated the S&P 500 SPDR ETF (SPY).

XLB Materials Select Sector SPDR Fund
XLY Consumer Discretionary Sector SPDR Fund
XLK Technology Select Sector SPDR Fund
XLI Industrial Select Sector SPDR Fund
XLV Health Care Select Sector SPDR Fund

The following individual stocks are most correlated the S&P 500 SPDR ETF (SPY).

DOW Dow Chemical Co
HAL Halliburton Co
DD E I du Pont de Nemours and Co
FCX Freeport-McMoRan Copper & Gold Inc
PFE Pfizer Inc
HON Honeywell International Inc
ABT Abbott Laboratories
MRK Merck & Co Inc

Dave Mecklenburg is the Editor-in-Chief of TigerSharkTrading.com.