When the market transitions from Bull or Bear, you want to give it time to sell off and run its course during a market meltdown in order to find the best values.  Just like the real estate market imploded, you don't want to buy a house cause its cheaper, let it finish its downward plunge then step in buy it when its reached its bottom price or close to it.

However, when the market is selling off you need to watch for stocks that have the highest Relative Strength, or RS, who maintain their price highs.  RS is a comparative indicator that gives a reading of 1 to 100 with 1 the weakest and 100 being the strongest as compared to how the rest of the stocks are performing relative to each other.

Stocks with high RS that are trading near their price highs during a market selloff help you spot which stocks are likely to lead the market when the Bull Market resumes.  So, in a way, you can be thankful that selloffs occur because they reveal which stocks are prime long candidates kind of like when the tide goes out, you can see more clearly who's been swimming nakes.  :)

Here are a couple of stocks that I mentioned earlier in the week that seem to be holding up pretty well during yesterday's sell-off.



AGU

MELI