Lately I have found myself down playing what I’m seeing on TV. But it’s not because of a slow news day. With all of the domestic and international events dominating the financial media, it has become a distraction from what is really going on in the market. Stock charts don’t lie. I have always talked about keeping a disciplined distance from the opinions discussed in the media, but it is particularly important right now to keep the news out of your investment decision-making process.

If you are focusing on the news of possible Fed policy tapering, and/or military action in Syria, it most likely results in a more negative outlook on the stock market. But the fact is, leading stocks are breaking out and running. It’s definitely a stock picker’s market, and my optimism stems from the price action on individual leaders. For the most part they have held up well under the market’s volatility this year and are gaining strength here.

Now that we are into September, the market could be setting up for a strong fourth quarter rally. The volatility we experienced throughout the summer did us a favor by illuminating many of the market leaders. Focus on the stocks that held up the best, they will be the stocks with the highest RS ratings. Let the stock charts be your guide.

Best returns,

Scott O’Neil

President, MarketSmith