After hitting new highs and finding support at the 50-day moving average, the market has been showing healthy price action. This is the time to home in on the market leaders. The key here is to make sure our best positions also become our largest positions. We do this by strategically “force-feeding”—or pyramiding into—our stocks that are showing continued strength and shedding our losers. Pullbacks to the 50-day moving average and second-stage breakouts are key areas to add. Let the stock chart be your guide here.

Of course, this does not mean piling into one stock or one industry group without abandon. We still need to protect ourselves. When a stock begins to show signs of weakness, we follow our sell rules and act decisively.

Also, I spoke in-depth about finding the next market leaders and industries in the most recent Master the Market webinar. In case you missed it, it’s available here.

Best returns,

Scott O’Neil

President, MarketSmith

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