So Spain gets up $125 billion to prop up its banking system, and buyers are back in market again.
We could even see some much-needed follow-through today for the major averages, which would confirm a new uptrend. How long it lasts is the question, but if indices end the day with big percentage gains (at least 1.5%) and volume comes in higher than it did Friday, there's your follow-through day on the sixth session of a rally attempt that started June 4.
With buyers in control for now, where is the best place to make money? This is where opinions differ.
There are a lot of different ways to make money in the stock market. The majority of investors like to buy low and sell high, while a smaller group likes to buy high and sell higher. I'm in the latter group, which is why my focus, at the moment, is on stock near highs as opposed to those near lows.
I've never had a problem favoring the quality merchandise in the market, because stocks with top fundamentals showing relative price strength in the early stages of a possible new uptrend can materially outperform those that far off highs. That's especially so for those that have been hit hard by institutional selling in recent weeks.
The medical sector houses several stocks that have potential here. Let's first talk about Edwards Lifesciences (EW). I haven't seen meaningful signs of accumulation in the stock in recent days, but it's still acting well and showing resilience. Shares closed Friday at $88.23, just above a buying area of $87.10. If the market is ready to start a new uptrend, I wouldn't be surprised to see a new accumulation phase for the stock.
The company, with a market capitalization of just over $10 billion, makes products to treat advanced cardiovascular disorders, including heart valve and peripheral vascular disease. Full-year profit is expected to rise 32% this year (compared with 2011) and 29% in 2013.
Another interesting name in the medical sector, also showing relative price strength with solid fundamentals, is Align Technologies (ALGN). The company's Invasalign teeth-straightening system has proven itself to be a great alternative to braces, and the product continues to enjoy strong demand.
Shares gapped up April 24 after the company reported strong first-quarter results. Earnings rose 29% from a year earlier to $0.27 a share. Sales also increased 29% to $135.1 million. Annual return on equity is solid at 18%, mutual fund sponsorship has been increasing in recent quarters and the company is debt free -- all big positives.
Align's first resistance level to conquer is its May 29 intraday high of $32.90. If it can clear that, the stock's prior high of $34.29 would be in play. This is another growth name in the medical sector that has a good chance of outperforming if new institutional money starts to come in from the sidelines.