Investor's Corner: Don't Argue, Just Listen To Stock Market

The stock market is offering such a chance right now.

The follow-through day that turned this market into a confirmed uptrend came Aug. 29. On that date, the Nasdaq soared 2.5% on higher volume than the day before.

After that follow-through, the market staged a modest rise on low volume. Many high-quality stocks mirrored that behavior.

But a good number of stocks broke out on Aug. 29 or since then.

Chinese search engine Baidu.com (NasdaqGS: - ) broke out of a cup-without-handle base Sept. 4 over a 219.35 buy point 16oint 1). Even if you were waiting for a handle, you had the chance to buy it as a rebound from a pullback to its 10-week moving average. It has since shot up a fast 26%.

Mindray Medical (NYSE: - ) received a burst of upside momentum on Aug. 31, as a volume surge confirmed a rebound from its 10-week line (point 2). Shares of the China-based maker of diagnostic and tumor-fighting equipment have surged 18%.

Dawson Geophysical (NasdaqGS: - ), a provider of seismic data to oil explorers, is now 17% past its 70.59 buy point 18om a pullback to its 10-week line, also touched off Sept. 4.

These three stocks, from three different industries, have something in common. They are market leaders.

Each is a member of the elite IBD 100, which tracks the top-rated stocks.

The fact they didn't form long bases shouldn't be a surprise. They've been busy rallying, just as great stocks do. Baidu.com's base was as short as you'll find for a proper cup-without-handle base.

Have you been reluctant to jump in? This seems like an awful time to be in the market. Nothing is scarier than watching CNBC and CNN for a few hours.

The subprime-mortgage fiasco is still rippling. The dollar is unraveling. Gold is at its highest since 1980. Oil keeps hitting record highs. Iran isn't giving up on pursuing a nuclear program. Osama bin Laden is still issuing calls for martyrs.

This is almost always how the world looks when stocks turn and begin a new rally.

If this were an ideal world, the market wouldn't be offering a fresh chance to get in.

That fat run-up Sept. 18, after the Fed's aggressive action, was not a follow-through day. It was a wake-up call to those who were not taking seriously the already-established uptrend.

Waiting until then, however, would have prevented you from buying the stocks mentioned above and others that reached proper buy points.

In effect, we may be watching history repeat itself.

Whenever the market starts a new bull phase, the rally's best winners tend to break out within the first three months or so of the follow-through.