For weeks, no, make that months, I complained about the market's bad breadth. Week after week I wrote about the lousy advance/decline line and the lack of stocks at new highs. And the entire time I was busy complaining, the

S&P 500

and the

Nasdaq

kept climbing. Sure the

Dow

climbed as well, but not nearly as spectacularly as the other two.

However, I was not alone. We were hard pressed to find a technician who wasn't droning on about those lousy statistics. I received countless emails asking if it was different this time, perhaps those old indicators just didn't work anymore. Each time I responded that I had never seen a market that did not ultimately resolve itself by improving breadth or declining averages.

There are over 3,000 stocks which trade on the

NYSE

, and the

Nasdaq

has nearly twice as many as that. When the advance/decline line was lagging, as it did for about five months, it told us that only a small number of stocks were moving toward the upside each day. But that seemed to bother only the technicians. Too many investors were concentrated in too few stocks, but as long as their five or 10 beloved stocks kept going up, there was only one decision to be made: how much to buy.

Then, all of a sudden,

Cat

(CAT) - Get Report

warned about a disappointing quarter. But the stock didn't make a new low. No one cared. Why not? Because no one owned the darn stock anymore; it was sold out. Heck, you had to be nuts to own a cyclical stock. Was Cat gonna sell earth-moving equipment over the Internet? No way, so why bother?

But then, one by one, the cyclicals improved: papers, chemicals and aluminums, to name a few. These stocks were so underowned that once the buyers arrived, there were no sellers to offer stock. It's been quite some time now, but perhaps you will recall the way tech jumped off the lows in October? No one owned 'em, so there was no one around to halt their rise. There is one big difference now vs. then: There had been so much selling in August and September that most stocks were underowned; today, many of those one-decision stocks are overowned. So now comes spring-cleaning time: out with the old and in with the new.

With this improvement in so many industries' charts comes a vast improvement in the breadth of the market. Eight straight days of positive breadth! The last time we saw numbers like that was when the Dow was trading around 8000.

There is another chart which depicts this recent broad rise. It is the chart of the New York Stock Exchange Unweighted Average. This average is calculated using QCHA. (Supplied by

Quotron

, QCHA is the average percentage movement for all NYSE stocks each day on an unweighted basis. QCHA can be found in

Barron's

Market Lab each week.) This chart is updated through Friday, but it is plain to see that it has now made a new high. In essence, this chart takes all stocks and does not weight them by price (the way the Dow does) or via market cap (the way the S&P and Nasdaq do). A large number of stocks are up -- and performing well.

So, can this rally in the cyclicals keep zooming ahead? It might. But it's likely to take a rest any day now. Yesterday's fizzled rally found many of these stocks halted at old highs and ready to rest. Within a day or two, we will reach a maximum overbought reading in the market, which should help give them a much needed rest. After such a rest, when the market gets oversold again, I would expect their rise to continue.

And what about the old leadership and those stocks' recent plunge? There was much panic in them Monday. As those folks over at

CNBC

told us several times that the Nasdaq's decline was the equivalent of 700 points in the Dow, I found myself wondering why they never made the same comparison when the Nasdaq was up 100 and the Dow was flat. I even received a few emails from readers blaming the recent whack in technology stocks on me. Their reasoning? If I hadn't asked the market for healthier readings, then they would still be making money, not losing it.

As for individual stock charts, the best cyclical in my pile remains

Alcoa

(AA) - Get Report

in the DJIA. While I wouldn't dive back in to tech shares immediately, I'll point out that

Hewlett-Packard

(HWP)

did not participate in the tech wreck; instead, it was up a buck Monday.

Many of the oil-service and cyclical names are at or near resistance, so I am a buyer into a correction.

Goodyear

(GT) - Get Report

,

3M

(MMM) - Get Report

,

Air Products

(APD) - Get Report

and

Baker Hughes

(BHI)

are on my list.

General Mills

(GIS) - Get Report

is back on my positive list again, too.

On the negative side,

McDonald's

(MCD) - Get Report

had a failing rally and then broke an uptrend line dating back to the October low.

Anheuser-Busch

(BUD) - Get Report

did the same.

Merck

(MRK) - Get Report

broke an uptrend line dating back to the October 1997 low.

The banks are churning up here (see how, with the DJIA up 270,

Citigroup's

(C) - Get Report

blowout earnings still did not take it to a new intraday high vs. last week) and are now vulnerable to profit taking.

The overbought/oversold oscillator tells us that we will reach a maximum overbought reading within a few days. In addition, many of the recent winners are so close to resistance that they deserve a rest. Also the previous leadership must get sold out. However, there truly is an underlying improvement in many stocks, and that tells us there will be stocks to buy when they get oversold again.

New Highs and New Lows

Helene Meisler, based in Singapore, writes a technical analysis column on the U.S. equity markets on Tuesdays and Fridays, and updates her charts daily on TheStreet.com. Meisler trained at several Wall Street firms, including Goldman Sachs and Cowen, and has worked with the equity trading department at Cargill. At time of publication, she was long Hewlett-Packard, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. She appreciates your feedback at

KPMHSM@aol.com.