You often write about buying on weakness, but I've found that when a market begins a new rally, many of these resilient stocks (that didn't fall much during the correction) are extended well above support and key moving averages. So should I try to buy these names on weakness when the market turns up? 5/27/10

Mike Cintolo: This is a great question and is a perfect example of how, in the stock market, there are no absolutes. Yes, during 80% of a market cycle, it's usually better to buy stocks that are either pulling back normally toward some support (like the 25-day or 50-day moving average) or decisively breaking out of a well-formed basing structure.

However, when the market has come through a multi-week correction and just confirmed a new uptrend, you're almost always better off just buying the strongest growth-oriented stocks around. Assuming the market's new rally is the real McCoy, it's likely that there are tons of mutual, hedge and pension funds all trying to establish positions in the market's new leaders. The result? Little in the way of pullbacks for the first two to four weeks.

That's not to say you shouldn't adhere to your loss-cutting rules in case something goes awry, but at least for your first couple of purchases, buying the most resilient growth stocks (not defensive stocks like gold or food) as soon as the market gets going is usually a good bet.

Michael Cintolo
Vice President of Investments, Editor of Cabot Market Letter and Cabot Top Ten Trader

A growth stock and market timing expert, Michael Cintolo is editor of Cabot Market Letter and Cabot Top Ten Trader. Since joining Cabot in 1999, Mike has uncovered exceptional growth stocks and helped to create new tools and rules for buying and selling stocks. Perhaps most notable was his development of the proprietary trend-following market timing system, Cabot Tides that has helped Cabot place among the top handful of market-timing newsletters numerous times. Cabot Market Letter is one of only nine newsletters included in Hulbert Financial Digest's 2010 Honor Roll for performance in up and down markets, and is a Timer Digest Top Ten Long-Term Timer.

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