Monday, September 19, 2011

The next leaders

Mark Minervini

"Let the stocks lead you to the sectors; the best names will almost always move before the underlying sector is hot.

Leading industry groups can emerge even while other stocks continue to make new lows during the initial upswing. As a general rule, I buy strength not weakness. True market leaders will always show improving relative strength, in particular during a market correction. You should update your watch list on a frequent basis, weeding out issues that give up too much price, while adding through forced displacement new potential buy candidates that show divergence and resilience.

As the overall market is bottoming, your watch list should multiply over a number of weeks. The better stocks start moving into new high ground as the market rallies off its lows. This is a good sign that the market has either bottomed or is getting close to a bottom. This is a critical juncture."

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