And the coast is clear. Well, not necessarily but this rally isn't going to go gently into the night. There are several compelling aspects to this rally. There are stocks coming along for the ride but there are also undervalued stocks that might be overlooked by the momentum crowd. We saw some rotation yesterday into blue chips including drug makers which reflects more of a bunker mentality than one of reckless abandon. I suspect a lot of the action came from the pros that have missed this rally and still need to catch up as waiting for a correction isn't going to cut it.
There is still a herd mentality to the rally as well and rotation is swift. Just looking over the past one month period yesterday saw more stocks closing at their lowest point than highest for the New York Stock Exchange. Yet NASDAQ stocks sport far more "highs" than "lows" over the past 30-days.
For the past twelve months new highs are significantly above new lows but somewhat misleading for those late to the party. One thing that continues to stand out is once a stock gets moving the bandwagon fills quickly. Of the 221 new highs, 193 traded volume well above the daily average.
The pattern suggests rotation will continue with money afraid to move to the sidelines while the big boys figure it out. The one thing individuals must do is make sure they don't listen to the holier-than-thou crowd that seems to be on television every second. Those are the guys and gals that missed this amazing rally then chalk it all up to Ben Bernanke. Most have never read an Income Statement or Cash Flow Statement in their lives - only a couple have looked at Balance Sheets. I repeat - just a couple.
Don't let anyone hint that your stock market gains aren't as pure as the real estate gains or gold gains or antique guitar gains. In fact, stock market gains are more real than any other gains. In the end, they're based on companies that generate profits which is different than appreciating in value versus another asset class. I want you to own real estate and gold and antique guitars, but don't let the bunker crowd spook you or make you feel guilty. They have no guilt, after all, for spooking millions of people out of the greatest rally in a lifetime.