First look at the markets themselves. Do your normal technical analysis and see if you are interested in any one market more than the others. From your technical analysis point of view, does one market look more poised, to make a move in either direction? If you can find this situation then you can break that particular market down into it's individual sectors for further study. With your group of sectors, again do your technical analysis and see if any of these appear to stick out a little more than the others. From this group, you would then pick either the strongest in the case of going long or the weakest if you are interested in shorting.
Then you should do some basic fundamental research on that particular sector and group of stocks. If you are interested in possibly going long on a particular sector or a group of stocks, you probably would not want to do so if the fundamentals are absolutely horrible. This little bit of extra work just may give you some insight and some news items to watch for, so you have a better understanding about that sector. You may even find a sector that captivates your interest so much you may want to specialize in that sector alone. This is the way the major brokerage companies divide their analysts. They have some watching each sector and then the stocks contained within those sectors.
Using the method above, you would be your own sector analyst and expert. You would know how your particular sector acts and if it has any seasonal tendencies. You would also know which stocks within that sector influence the sector the most, the least and how all of the stocks tend to interrelate to each other. You may want to pick particular stocks and trade those stocks to stay within your sector but you can also participate by using some of the sector mutual funds that are now being offered. You have some options most investors do not have or take advantage of fully.
Next, we try to identify stocks we are interested in purchasing (going long) or selling (going short) first. We do this using technical analysis. Then we try to determine if the move we anticipate may warrant the purchase of options instead of the outright purchase or shorting of the stock itself. From our list of candidates, we will then do some fundamental research to determine if our technical analysis is in opposition to the fundamental point of view. If it agrees, we can then proceed with more confidence than we may otherwise have.
At the present time, our technical analysis of the NASDAQ is it will move lower. Again, using technical analysis, we have looked for the weakest companies and only then looked to fundamental analysis. We then select the companies we feel are the weakest technically as well as fundamentally and have recommended options on some of those companies.
You cannot use fundamental analysis alone to trade unless you have a lot of time and are very, very patient. You can trade on technical analysis alone but why would you want to exclude something potentially useful. Why not use all the bullets in your analysis gun?