Let’s define a bounce as a thrust higher that rolls over to new lows. Rally is defined as an action that rallies above the lows of previous days and makes higher highs. Obviously, one’s opinion on this question is important when it comes to strategy especially following the strong bounce in the S&P 500 (SPY) from last Friday’s lows. A bounce would mean it would be prudent to reduce exposure on strength, while the latter would mean it’s prudent to remain fully invested and invest our energy into making sure we are exposed to the best sectors and setups. In today’s commentary, I will make the case that this is a rally and not a bounce. Then, identify the most profitable stocks, sector, and set-ups. Read on below to find out more….You can enjoy the updated version of my weekly comments published December 9, 2021 in the POWR Stocks under $10 newsletter.

The stock market has put together an impressive rally off last Friday’s lows. From there, the S&P is up 3.8% even after today’s nearly 1% pullback. The is up 3.6% although it’s off 3% from yesterday’s highs.

So, it’s certainly clear that the market has had a nice bounce and is now giving back some of these gains. As we saw in November’s most recent month, the majority of weakness can be found in growth and small-cap stocks.

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