Tuesday, December 30, 2008

A Welcome Rally Greets Investors Ahead Of The New Year; Before You Get Too Bullish Look At The Volume

Today was a very positive day for the stock market indexes with the SP 600 rallying the most with a 3.7% gain. The Nasdaq, SP 500, SP 600, and DJIA all made it over their 50 day moving averages which helps now give them a little bit of support if this rally can catch any legs.

However, before anyone gets "too for-sure" of themselves and go out there calling a bottom I would like to take your attention BACK to 2002 and 2003. What did the rallies of October 2002 and March 2003, which WERE REAL bottoms, have that this rally does not have? If you answered volume, you are right. If you answered nice stocks, you are right. If you answered stock setting up in "hot" based, you are right. If you said...well you get the point. This rally off these lows, with these charts are NOTHING like the rallies of either October 2002 or March 2003. So for those that keep using those dates as reference points please check your charts.

Right now, the leading industry is airlines and I am not sure how that can be the "innovative" fresh new leading industry that is required to lead us out of bear markets. However, I am wise enough to know to be long the leading stocks in the leading industries of a market uptrend and that is what I am going to do.

I am not going to tell everyone the top 10 industry groups as I believe you should have to do a little leg work on your own. But I can tell you where to find them. If you have a subscription to IBD go to section B and find the industry groups. Go through the top 10 industry groups and go find the top 5 stocks in each industry group. If they all look strong, pick the strongest and go long. I am long a couple of leading stocks in leading industries right now and feel very happy with my current situation.

I may only have 10 longs right now but you can be sure every single one is a leader in its respective industry right now based on either price and fundamentals or just price performance. Why be long a laggard when there are so many leaders out there that can make you real money.

For those of you that think the new leaders that go up 1,000% to 10,000% are going to come from AAPL, RIMM, GOOG, BIDU, or CROX I have some sad news to tell you all. Don't you all remember the year 2000? Don't you remember everyone saying MSFT, INTC, JDSU, QCOM, and CSCO were all going to come back and be huge winners from 2000 on to infinity. Well, I don't know if you have seen CSCO, MSFT, DELL, INTC, JDSU, or QCOM recently but since 2000 all of these are down over 50%. How has that dividend treated you?

Too bad those that were stuck in these never learned their lesson that buying yesterday's all-stars is not very wise when they are about ready to enter the Hall-of-Fame. Sadly, too many buy yesterday's all-stars thinking they are going to get yesterday's returns. The future is always in the new companies and will always be. For those stuck in the past with AAPL, you only ensure that when the next REAL LEADER shows up, you will not be in the stock messing it up for all of us. :)

The stock market wrap up video one and video two are available on the Gold Forums. Video one small YouTube version will be available when my video technician gets it on YouTube. Have a great night. Happy New Years!

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