Find the '08 Leaders That Won't Quit

Most stocks posted multiyear lows in the second half of 2008, but a select few avoided the selling pressure and are now trading near significant rally highs. While market players are naturally attracted to the sea of broken-down equities because they look "cheap," issues that survived the onslaught might offer significantly better returns in the months ahead.

If you're still compelled to chase popular issues that got ripped apart last year, check out Monday's column for bottom-fishing strategies and technical filters that could keep you out of trouble in this January market. If you'd rather play the winners hiding within this universe of losers, stay tuned -- that's the focus of today's discussion.

Several caveats are in order when looking at the strongest performers in the second half of last year. First, winners from one year often fail to duplicate their superior performance in the following year. Second, many stocks that moved against the downward tide did so because they naturally oppose the direction of the major indices.

iShares Barclays 20+ Year Bond ETF (TLT) eSignal

Bond trusts are an obvious example. The iShares Barclays 20+ Year Bond (TLT Quote) ETF ground sideways under broad resistance near $100 for more than five years before breaking and going vertical in November. The trust tacked on almost 25% before starting to pull back last week. This is a phenomenal rally for this relatively sedate market.

With the parabolic move driven by depression fears, it doesn't make sense to chase the fund, as long as equities continue to recover and press higher. Additionally, the instrument is clearly overbought and could spend the next three to six months testing the recent gains and dropping as low as $100 before buyers return in a strong recovery effort.