Momentum growth stocks are still not participating in this rally. Momentum leaders stock index is still not showing a price uptrend signal. We should wait on that signal, before we can meaningfully start to invest in this category of stocks.
Last week an index, I maintain of all stocks traded on the NYSE, AMEX and NASDAQ exchanges, also gave an uptrend signal (on 1/6/2012). I call this index the General Market Index.
Market Breath ratio, S&P 500 index and the General Market Index are all showing price uptrend. However the Momentum Leader stocks are not showing a price uptrend.
The Market Breath ratio is showing overbought/extended signals, meaning that the market has gone up for some time and it may take a pause. As a rule when this signal appears, it is not a time to add new long positions. If one is able to find an outstanding stock, an exception to this rule can be made. Long positions are trades where one buys a stock expecting it to go up in price.
Chronology of getting uptrend signals:
Market Breath ratio gave an uptrend signal on 11/30/2011.
S&P500 gave an uptrend signal on 12/9/2011.
General Market Index gave an uptrend signal on 1/6/2012.
S&P500 gave an uptrend signal on 12/9/2011.
General Market Index gave an uptrend signal on 1/6/2012.
Momentum leaders stock index
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