NEW UPTREND

After nearly four months of chop and slop, the market confirmed a new uptrend on September 1st. As with many new uptrends, leading stocks will begin breaking out near the follow through day (FTD). The September 1st FTD was no disappointment as I began to make initial purchases. Leading stocks are showing decent price progression and many are extended above even their 10 day moving averages.

First, I want to identify some of the leading stocks of the market since the FTD. Also, we can see some trends as the Cloud Computing industry is providing many of the leaders.

FFIV
ARUN (Purchased 9/1/10 at $19.00)
AKAM
CRM
VMW
RVBD
NFLX (Purchased 9/1/10 at $130.30)
PCLN
CMG (Purchased 9/1/10 @ $154.53)
MELI

We are now at a point where what appears to be the leaders have shown their faces. These stocks now have some cushion so there is little to do but watch our positions as volume will surely make its way back into the market post Labor Day Holiday week. So far, the Nasdaq has only experienced one distribution day. Although, we have a market of stocks and not a stock market, it would be ideal to see some nice days of accumulation on the indexes.

The indexes have retaken their 50 day moving averages (unfortunately in lower volume) and now the next test will be their 200 day moving averages. Ideally, we can power through this moving average in bigger volume.

So while we have identified the early leading stocks, if this FTD is the real deal there should be another wave of movers to jump on which is the good news if you missed the early breakouts. There should be some safer opportunities to add to these leaders down the road as well. History has proven (i.e. Aug-Nov 2007) that the stocks in the top industry groups near the FTD will perform the best.

The top performing industry groups are as follows:

#1 Leisure/Travel (PCLN, CTRP, MMYT)
#2 Software (VMW, CTXS, CIS)
#3 Data Storage (ISLN, NZ, PAR)
#4 Leisure/Movies (NFLX)
#5 Computer Enterpise (CRM, QLIK)

Note that the Retail/Restaurant group has moved up considerable with stocks like CMG, PNRA, MCD, BWLD, YUM, DPZ, and BJRI