CHAPTER 16SELECTING INDIVIDUAL STOCKS
If you are following a piece of the market, such as an individual stock or sector, you should track what that stock is doing relative to a larger related group as well as the price of the stock itself. (This is called relative strength.)
So compare a stock with a sector, a sector with an index, and an index with the broad market. Is it stronger or is it weaker than the larger group?
Look for the leaders. The leadership in a new bull market telegraphs its intentions by generating relative strength toward the end of the prior bear market. So does the leadership in an intermediate rally.
If you have a stock that is making a bottom when the market averages already have gone up 50 percent, this is not nearly as ...
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