Leading Stocks Are Acting Like They Want To Run

My attention will always be on the leadership of the market.  At the moment, since March’s follow-through day we have seen leadership grow.  The NUMBER 1 thing I look for is how leadership is acting, number 2 is price/volume action.  Everything else is simply secondary and can not trump the first 2.  At the onset of the follow-through we did not see enough leadership to say we have a new bull market.  However, a few weeks later we are certainly seeing more and more leadership emerge.  IBD has shown that leading stocks can break out and lead as far out as 13 weeks from a follow-through day.  We have plenty to go to see more leadership head our way.

What are leaders?  They are stocks typically seen in the IBD 100 and IBD 85-85, sometimes it takes a bit before we see them enter into these indexes but more often than not they are in there.  Stocks like Netease.com (NTES), Netflix (NFLX), Open Text (OTEX), SXC Health Solutions (SXCI), Longtop Financial Technologies (LFT), Neutral Tandem (TNDM), GT Solar International (SOLR), Shanda Interactive Entertainment (SNDA), Changyou.com (CYOU), China Sky One Medical (CSKI) are leading stocks.  It is these leading stocks that will show MONSTER STOCK gains.  History has proven that leaders like the ones shown above are the ones that will be the MONSTER STOCKs and not the beaten up laggards.

We have moved quite far, but remember overbought conditions can last a very LONG time.  I do not think we have a brand new bull market like 2003 or 1999.  On the contrary, I believe we are going to see a 50% rally from the lows in a LONG Bear market.  With Obama quadrupling the size of the budget deficit in one year (remember, it took Bush 8 years to get $1tln and Obama 1 quarter) will have unitended consequences that will devistate this economy.  It will take a wholesale change in Washington to clear the mess both Bush and Obama have created.  I have faith in the American people will wake up and demand we erase the unconstitutional acts by both Presidents and course correct this nation.

Be patient with the leaders, but do not let them pass you by!

Positions:  LFT, TNDM, OTEX, SOLR

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