Does anyone use correlations between stocks and indexes to day trade? This could be a market index or ETF. This could also be sector index or ETF. My general trading is mostly to focus on the technical pattern of a stock and use the various inflection points for entries and exit. If I'm day trading an energy stock, I'll usually look at the market (SPY) and sector (XLE) for help with the general direction. That is, if I'm looking to short the stock, I'll check for market and sector weakness ahead of taking the position. But other then a check for a few down bars, general trend, or an upcoming inflection point, I don't do much with this. So I've been trying to figure out how I can use the market and sector more to my advantage. The general idea is that markets move sector, and sectors move stocks, but is this true in day trading? Would I find more high-probability opportunities if I were trading stocks with high market and sector correlation? What are some of the general rules that you use for correlation? What time frame do you use for measuring correlation? How many periods? What's your threshold for "high correlated"? My research on correlation points to a 20-day correlation of above .80 being "highly correlated." Not sure how others came up with 20 days. TradeStation's correlation indicator has a 14 period default, which doesn't make any sense to me. Not sure if using daily charts for correlation is useful for day trading. I've used MetaStock to measure correlations on 5-minute charts for 78 (1 day) and 234 (3 days) periods. Not sure if that's any better. I appreciate any thoughts, feedback, research or links to more information.