I’ve comprised a list of stocks that have led this past rally since last August.

I’ve listed their quarterly YoY

EPS growth along with their Net Profit Margin and Return on Equity. These are very important growth
characteristics that stocks contain that make very large moves and lead bull markets/rallies. This
fundamental explanation can perhaps stem from the expected growth rate of dividends with ROE and
NPM having a large part in that factor via the Du Pont equation.

You can see that there are plenty of triple digit quarterly EPS growth numbers within this list. The
average ROE is 35.7% with an average NPM of 21.7% versus an average of around 13% historically for
the S&P 500

No
. Ticker Perf. (Half Year) Quarterly EPS Growth YoY ROE NPM Industry
1200%, 2300%, 650%,
1 TZOO 187.13% 5400% 16.80% 14.60% Internet Information Providers
2 MIPS 172.61% 55%, 183%, 25%, 33%, 27.80% 28.10% Semiconductor
3 JOBS 126.69% 73%, 26%, 10%, -50% 15.20% 22.20% Staffing & Outsourcing
4 SPRD 98.55% 3600%,172%,163%, 102% 15.40% -7.90% Semiconductor
5 PCLN 91.43% 54%, 52%, 54%, 44% 33% 22.60% General Entertainment
6 SINA 90.98% 47%, 44%, 47%, -36% 46.35% 21.90% Internet Software and Services
7 TGA 89.99% 300%, -22%, -200%, 750% 17.83% 13.60% Independent Oil & Gas
8 FTNT 89.07% 100%, 65.65% 14.80% Computer Peripherals
9 BKI 79.51% 120%, 118%, 44%, 154%, 31.68% 6.30% Paper Products
10 IMAX 79.00% 450% 71.39% 21.72% Photographic Equip. & Supplies
11 TQNT 77.84% 170%, 150%, 270%, 180% 25.38% 20.60% Semiconductor
12 IDCC 74.98% 14%, 32%, 645%, 560% 73.25% 42.10% Wireless Communications
Scientific and Technical
13 NANO 74.31% 560%, 304%, 151%, 90% 26.57% 17.50% Instruments
14 FOSL 67.02% 92%, 220%, 103%, 49% 23.46% 12.30% Recreational Goods
15 FNGN 65.31% 1800% 64.57% 57.20% Diversified Investments
16 LULU 62.86% 70%, 130%, 200%, 100% 37.12% 15.40% Textile - Apparel Clothing
17 GNTX 58.40% 41%, 166%, 240%, 375% 17.01% 16.96% Auto Parts
18 ONNN 56.84% 92%, 380%, 1900%, 46% 27.23% 13.33% Semiconductor
19 ALXN 56.60% 35%, 100%, 48%, 82%, 49.67% 62.08% Drug Manufacturers
20 APKT 55.73% 120%, 157%, 127%, 22% 16.06% 18.59% Communication Equipment
        AVG - 35.07% AVG - 21.7%  

Most importantly is the view from a technical perspective. I have laid out the top 7 or so charts from
this list below. You can clearly see that in mostly every case that the RSI and OBV (which I use for
illustrative purposes to compare volume on up weeks vs volume on down weeks) are hitting new highs
the same week the market is rebounding. Volume is spiking on these breakout weeks. More
importantly are the stocks that are hitting new highs. The charts below show the top 5 stocks on this list
hit new all-time highs.

As the market tears higher going into February, it is important to keep an eye on leading stocks. I’m
going to continually watch these and similar stocks to measure underlying strength in the market.
Whether there is a small pullback or large correction, the performance of leading stocks will show
themselves through their rising RSI lines.