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).

XLV Health Care Select Sector SPDR Fund
XLF Financial Select Sector SPDR Fund
XLK Technology Select Sector SPDR Fund
XLY Consumer Discretionary Sector SPDR Fund
XLI Industrial Select Sector SPDR Fund

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

ORCL Oracle Corporation
MDT Medtronic Inc
CAT Caterpillar Inc
HON Honeywell International Inc
COST Costco Wholesale Corporation
IBM International Business Machines Corp
GILD Gilead Sciences Inc
BRK.B Berkshire Hathaway Inc
EMR Emerson Electric Co
APA Apache Corp
EBAY eBay Inc
MSFT Microsoft Corp
LOW Lowe's Companies Inc
MCD McDonald's Corporation
GS Goldman Sachs Group Inc

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