Price and volume action of the indices are the primary indicators to gauge the strength of this rally, but you must go deeper to see the entire picture. Currently, the performances of the indices seem to be masking the true underlying strength of this rally. Today, leading stocks are acting strong. Select retail and medical stocks are confirming the “market in uptrend” call made by IBD back on 3/30. When so many breakouts are working and the leaders are able to hold on to their gains, it only adds confidence that this rally is working. It also appears that Machinery, Oil and Oil Service stocks are taking a mild break today which suggests healthy rotation.

 

Furthermore, the stocks highlighted in the MarketSmith Growth 250 have been dead-on in identifying the market leadership and the best investments for participating in this rally. Fortunately for those who are still waiting on the sidelines, it seems there are still some stocks breaking out of bases. Just remember that if you are a buyer here, make sure you stick to your buy rules by precisely selecting your entry points and staying nimble enough to correct yourself if the market uptrend begins to falter.  

 

Best Returns,

 

Scott O’Neil

President, MarketSmith