Mark Minervini-
A bull market is always dominated by at least one sector and several sub-sectors.
Just as the leaders lead on the upside, they also lead on the downside. Why? After an extended rally or bull market, the market’s true leaders have already made their big moves. The smart money that moved into these stocks ahead of the curve will move out swiftly at the first hint of slowing slow. When the leading names in leading industry groups start to falter after an extended market run, this is a danger signal that should heighten your attention to the more specific signs of market trouble or possible trouble in a particular sector or industry group.
There will come a point when leading stocks stop making new highs, start to churn, or, even worse, buckle and reverse direction. This often happens before the overall market tops and gets into serious trouble.
Some of the market’s key leaders will start to top out, while the indexes may continue to accelerate higher.
Just as market leaders are out front on the upside, they also tend to lead on the downside.
For example, the Tech stocks that led the 1998-2000 bull market were the biggest losers during the 2000-2002 bear market. Financials and housing stocks were market leaders during the 2003-2007 bull market and then took the biggest losses during the bear decline in 2008.
Though, there is a caveat to this rough rule of thumb: If the leadership stocks or sectors started to emerge late near the end of the bull market cycle that preceded the subsequent bear market, then in some cases, they can lead during the bull market.
Very often, leaders of the "next" bull market, emerge from the most unlikely areas, but quickly reveal themselves through the application of sound price and relative strength analysis techniques. Keep an eye out for those stocks that hold up the best during this bear market correction; they could be the next cycle’s bull market leaders.
A bull market is always dominated by at least one sector and several sub-sectors.
Just as the leaders lead on the upside, they also lead on the downside. Why? After an extended rally or bull market, the market’s true leaders have already made their big moves. The smart money that moved into these stocks ahead of the curve will move out swiftly at the first hint of slowing slow. When the leading names in leading industry groups start to falter after an extended market run, this is a danger signal that should heighten your attention to the more specific signs of market trouble or possible trouble in a particular sector or industry group.
There will come a point when leading stocks stop making new highs, start to churn, or, even worse, buckle and reverse direction. This often happens before the overall market tops and gets into serious trouble.
Some of the market’s key leaders will start to top out, while the indexes may continue to accelerate higher.
Just as market leaders are out front on the upside, they also tend to lead on the downside.
For example, the Tech stocks that led the 1998-2000 bull market were the biggest losers during the 2000-2002 bear market. Financials and housing stocks were market leaders during the 2003-2007 bull market and then took the biggest losses during the bear decline in 2008.
Though, there is a caveat to this rough rule of thumb: If the leadership stocks or sectors started to emerge late near the end of the bull market cycle that preceded the subsequent bear market, then in some cases, they can lead during the bull market.
Very often, leaders of the "next" bull market, emerge from the most unlikely areas, but quickly reveal themselves through the application of sound price and relative strength analysis techniques. Keep an eye out for those stocks that hold up the best during this bear market correction; they could be the next cycle’s bull market leaders.
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