Selective longs for a selective rally?

The indices turned oversold fairly quickly during this recent correction. In reviewing strong performers (since the March lows), several have formed solid bases and retracement patterns that suggest possible setups for further gains. Market breadth has been declining steadily as the indices have risen, suggesting that stock picking may be the best way to participate in further gains. The rally is tiring, however, so we will remain selective, set appropriate stops, and maintain some short hedges on indices.