Here’s What I Mean By Leadership

The market pushed strongly
higher as volume increased on the NYSE and declined on the NASDAQ.

 

 

 

After an impressive run in
November, the market and particularly the NASDAQ appear to be consolidating
their gains.  I have previously mentioned NASDAQ resistance at 2,150 that we
have failed to break through twice already and may be taking another run at. 
If you were following this column in October, you’ll remember the exact same
scenario as the index took three attempts before trading above its 200-day
moving average.  The resistance at 2,150 is almost that long, as it dates back
to January of 2004.  Whether we see a Santa Claus rally or year-end selling is
anyone’s guess; but one thing is for certain based on the market’s leadership
and action: we remain in an uptrend and will most likely move higher over the
next month or so.

 

The leadership I speak of
comes from a broad array of sectors: internet, computers, software, telecom
and retail.  For those of you that do not know what I term leadership; it must
fit the profile of fundamentally strong growth companies with accelerating
profits, strong stock performance relative to the market and the best
performer against its peers.  Apple Computer (AAPL) currently fits that
bill as the stock has outperformed 98% of stocks in the market as seen by its
12-month relative strength.  With its explosive iPod sales the company has
seen a nice ascent and is currently consolidating or building a handle against
its former high of $75. 

 

 

Since the market is in a
confirmed uptrend and most likely moving higher, it will most likely pay to
find the best merchandise to place money in as 2004 wraps up.  Corrections are
healthy to a continual rise and this case is probably no different.