Did you know this rally - which started back in early February - is now the longest-lasting continuous rally we've seen in many, many years? Unfortunately that doesn't exactly answer the 'when will it end' question. We do, however, have some perspective about how much of their luck the bulls are pressing here and now.  Before we get to that discussion though, let's look at the community's recent commentary. On the radar this week we've got Cost Plus (CPWM), Solarfun Power Holdings (SOLF), PURE Bioscience (PURE), Radient Pharmaceuticals (RPC), and Freddie Mac (FRE). Links to the write-ups are below.   Stocks In Focus Red Flags Are Waving - Reviews of PESI, DDSS, and PURE Sometimes a stock makes a solid, convincing move, but doesn't overdo it.... meaning that move is also a sustainable one. PURE Bioscience (NASDAQ:PURE) wasn't one of those well-tempered stocks last week, as James Brumley points out. Where's PURE going after the wild runup? This chart offers a couple of ideas.  How They Are Setting the Stage for Gains: KLIC, CPWM, SOLR  Cost Plus, Inc. (NASDAQ:CPWM) has been on fire lately, and Dennis Askew knows why. That's why he's considering it a 'buy'. But what is it that's driving his Cost Plus optimism exactly? Marketing, personnel decisions, and imposed inventory documentation that should make restocking more efficient. Read the article for the full details.  Radient's FDA-approved Diagnostic Test Detects Cancer Sooner It's been 20 years in the making, but Radient Pharmaceuticals Corporation (AMEX: RPC) is finally starting to see - and show - the fruits of its labor with Onko-Sure..... the company's cancer screening test. What makes the FDA-approved Onko-Sure test better? It can find cancer earlier than other tests. M.E. Garza paints the fiscal picture behind the technology.  Subtle Clues (both good and bad) From FRE, CBAI, and INSM The few people that were still following Freddie Mac (NYSE:FRE) as a trading idea were also starting to lose interest, as the stock's been less and less likely to move over the last several months. But, did the Freddie Mac chart just drop a very subtle hint that it's ready to roll again? Check out this chart.  Demand Drives Energy and Semiconductor Plays: POWR, SIMO, SOLF  How can you tell an industry is recovering? When its goods' prices jump across the board, and sales volume actually gets better rather than worse. As an example, Dennis Askew cites Solarfun Power Holdings Co., Ltd. (ADR) (NASDAQ:SOLF). In fact, we he also rates Solarfun Power Holdings a 'buy' after digging into last quarter's filings. .   This Rally: Against All Odds How can you tell when a rally goes beyond 'healthy and sustainable' to 'unhealthy and dangerous'? There are probably several dozen legitimate ways to do so. But, as we head into the close of the 42nd day of this stunningly-persistent rally, I only want to focus on one. First though, a data nugget to accompany some perspective....  As of today, this is the longest-lasting, unchecked (meaning there's been no significant dip - the explanation is too long to get into) rally in the last four decades, at least for the S&P 500. While records were meant to be broken, when it comes to the market, seeing things we haven't seen in forty years should make us all a little nervous.  That said, there are a few specific things to be nervous about.  While I'll be the first one to say nothing about the market - no rally, no pullback, and no chart - is ever completely perfect, I'll also be the first one to insist that there are just some things that have to make sense. If they don't, then everything about the current trend (or lack thereof) is in question.  Case in point? The fact that even though the NASDAQ Composite as well as the NYSE Composite Indices hit new 52-week highs today, the number of NASDAQ and NYSE stocks hitting new highs this week did not reach their highest levels we've seen in the last 52 weeks.  How is this possible? It's a sign that only a few stocks - probably the biggest of the large caps - are carrying all the weight of the market's apparent progress. All well and good, except for one thing.... it's also a major red flag of trouble ahead. The market needs all of its stocks to participate in its progress. When the bulk of them fail to do so, it means the underpinnings are shifting even if the overt trend seems fine.  We'll focus on the NASDAQ's new highs for the purposes of this commentary, but note the NYSE's numbers are completely interchangeable with this commentary.  The NASDAQ hit a new 52-week high of 2443.50 this week, while 231 of its stocks reached new 52-week highs. That's not, strangely enough, the highest number of new highs we've seen from the NASDAQ lately. We actually saw 280 new highs in mid-March. Yes, that was also a point where the NASDAQ Composite was hitting new 52-week highs, but that doesn't explain or justify a 'new high failure' this week. Consider that red flag #1.  That cautionary note can become a full-blown problem, however, when looking at new high levels from another perspective.  There is no magic number when it comes to the number of NASDAQ stocks hitting new 52-week highs that could be considered 'too high'. Some would say it's 200, while others would argue that even 350 new NASDAQ highs isn't excessive. Based on my data and back-testing though, with roughly 2600 stocks currently listed on the NASDAQ, 250 new highs is the point at which the group has made too much progress for its own good. In fact, the nearby chart illustrates pretty well what happened the last time the NASDAQ's new highs reach the 250 threshold.  Are there exceptions? Sure, but not a whole lot... not enough to dismiss the idea anyway.  And, the direness of the red flag in this case is doubled. Remember, not only are we just days removed from a spike in the number of NASDAQ stocks at new 52-week highs, but the composite has continued to move higher without bringing most of those stocks with it. Historically speaking, the composite hitting new highs without a growing number of stocks also hitting new 52-week highs has almost always ended at least a little painfully, even if it was on a delayed reaction.  Or to say all of this in a much simpler way, the sustainability of this rally - especially at this point in time - is very questionable.  I still don't consider this a stand-alone indicator, but it's a very, very accurate warning that could confirm other directional tools you're using. What it's telling is now is that something has to give sometime, as the market wasn't meant to break records while simultaneously sending mixed messages. So, add the 'new high' problem to your list of problems with this rally.  On the flipside, this is absolutely NOT something that should be interpreted to be the beginning of a new bear market. Most new high red flags simply signal a corrective move.  Just for reference, here's a full-screen chart of the small NASDAQ chart above. And, here's the NYSE's version.  In both cases you can see how the late 90's started to generate greater numbers of new highs. That's because the number of listed stocks increased, and the tech bubble began to inflate.... a problem that wasn't as nasty for the NYSE. Since then, the number of listings has been roughly the same for both exchanges. So, the 'excess' level has been relatively stable.  2003 was exceptional for the NASDAQ in terms of the number of stocks hitting new highs, as the bulk of them had been beaten so badly the two prior years, managing to hit a new high wasn't a big challenge. The same goes for the NYSE.       We Value Your Feedback Got comments, questions or suggestions? Send 'em on over: Email the Editor If you wish to send a written request or inquiry, please send it to our physical address: TGR Group, LLC  4653 Carmel Mtn Rd  Suite 308 #402  San Diego, CA 92130   Share the SCN Newsletter If you find the Small Cap Network Newsletter informative and profitable, please forward our newsletter alert service to like-minded friends and associates who share similar market interests.   Ensure Newsletter Delivery To ensure newsletter delivery, you can add any additional email addresses you may have to the Small Cap Network Member List. 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