Most of the time, if you check the charts I post here, you will notice a RS rating of 80 or higher. That means I am only dealing with the strongest 20% of the stock market.

I do this because 125 years of stock market research shows that the best and biggest "monster stocks" every year had a RS rating of at least 80. If my stock does not have at least a 70, I won't even take a second look at it.

Now, of course, the RS line alone does not make a stock a buy or a sell. Only a well-formed chart pattern, with the stock bouncing off the 50-day moving average on heavy volume or breaking out on heavy volume, makes it a buy or sell.

Not only that, but that base must be formed near the stock's previous 52-week highs. I prefer this, as it means that once the stock breaks out, there will be no overhead resistance and hence no sellers waiting to unload at higher levels.

IBD's 125 years of stock market research on the greatest stock winners -- I have confirmed the research -- has proved that buying stocks hitting fresh 52-week highs (this is the key here; not the 100th time on the list) outperform fresh 52-week lows. This is why I always focus on the best leading stocks that are within 20% of previous 52-week highs.

For me, when it comes to the fundamentals, it is all about annual EPS growth, quarterly EPS growth, quarterly sales growth, ROE, profit margin, debt, mutual fund ownership and cash flow.

But along with good fundamentals, I want the stock to be within 20% of a new 52-week high, under very heavy accumulation, and forming and breaking out of a base of at least five weeks long (and preferably seven weeks) before actually making the purchase.

When everything lines up fundamentally and technically, there is only one more test: Is the general stock market in an uptrend or downtrend? If it's in an uptrend, then it is safe to invest. If not, knowing that three out of four stocks follow the market, the long should probably not be taken. That is, unless it is in a leading industry group -- the top 20% of groups based on price performance from IBD. Let's get to the charts.

Titan Machinery

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Source: TeleChart Gold

Syniverse

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Source: TeleChart Gold

Telemig Celular Participacoes

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Source: TeleChart Gold

Bancolombia

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Source: TeleChart Gold

First Financial

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Source: TeleChart Gold

DRS Technologies

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Source: TeleChart Gold