Monday, May 19, 2008

Looking For Leading Stocks

One thing that I do not hear a lot about but that is very clear to me is that stocks that are leading ARE REALLY leading. That can be seen especially when it comes to the amount of stocks that are hitting new 52-week highs. About a couple months ago things started to slowly change when new 52-week lows stopped expanding at the pace they were.

After the March lows and a small market rally, the new high list started to slowly build. And now we are at a point where even on down days, the past two weeks, the amount of new highs either match, are breakeven, or barely losing to new lows.

On Friday there were 244 new 52-week highs to 95 new 52-week lows. This was the best reading I have seen yet, since God knows when. I know in the August to October there were a lot of stocks hitting new highs but I am not sure it looked THIS GOOD then.

The leadership is clearly focused in one area too. The energy stocks had 96 of the 224 stocks hitting new highs come from their list. These stocks that you should be watching for future bounces off the 50 DMA or breakout are PDO, FPP, ATN, PHII, RAME, HUSA, RDC, APWR, TELOZ, WLL, ESV, APC, WMB, OXY, GMXR, COP, NE, CVX, GTE, SFY, CNQ, GU, HOS, BTU, NXY, ECA, BTE, HK, CAM, HES, PDE, FTI, UNT, WFT, MCF, STR, PXD, HP, CPX, PXP, SPN, PBR, HAL, MMR, E, SSL, SWN, WTI, WHQ, PBRA, SM, EAC, GLF, PVA, FST, TTES, CXG, and WES. All of these stocks have GREAT fundamentals and are all leaders based on price performance.

Other leading groups are the Metals/Steel with 14 stocks hitting new highs. The all-stars of this group are SUTR, MTL, MEA, GTI, GGB, TS, SID, X, NUE, RS, SCHN, VMI, and MT. Behind that was the Machinery stocks with 12 new highs and WGOV, ENS, AME, BUCY, JOYG, GHM, ABB, ATU, PDE, FTI, NDSN, FLS, and CFX.

One of the hottest groups with three of the top 20 industry spots are the Transports with EGLE, UNP, GNK, BNI, KEX, NSC, WAB, and CSX. Mining had 8 hit new highs with FCX, RIO, BHP, RTP, and CLF leading the way with strong fundamentals. The Medicals are still hanging on with 7 new highs and ZOLL, ICLR, STE, and LSR are the top guys in that group.

Utility, Retail, Computer Software all rounded out the top groups with five stocks hitting new highs each. EGN, NFG, SBS, BKC, CVS, GYMB, LL, BKE, BMC, ATVI, ANSS, SY, and ANST are leading the way in those groups on Friday.

Everything you see here are hitting new highs when the market is still a good distance away from its old highs. These are our current leaders and as long as this market rallies, I want to be long these stocks.

I know some of you believe we are going to top soon. But I am telling you RIGHT NOW that stock charts look great all over the place. You name a lagging sector three months ago and it has moved up the list with a lot of high-growth technology and consumer speculative sectors. Along with the old commodity leaders just slowly selling off, which gives them a weaker RS performance to the big winners, but still keeps them rallying is taking place.

Overall, volume or no volume, as long as we trend up and I have a couple of really nice stocks and that one perfect chart--I do however need a few more perfect stock charts to have me completely fall in love, however--continues to move higher, I am going to be very happy with what I can get in a market that has a low VIX (around 17) and is full of ETF's that now suck up money that used to find its way into "hot" stocks. This is just less money that can be put to work in the momo monsters like MXC and PDO.

Aloha and I will see everyone in the chat room at 630AM HST/1230PM EST.

current longs/(shorts) and their total returns: GEOI 118% CMP 65% SOL 36% ICO 49% VISN 52% DGLY 49% HA 42% PDO 78% CPE 46% CSIQ 56% HIL 50% MTL 67% MCF 172% JST 40% IHS 258% EBIX 169% MA 477% (EEFT 33%)

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