The old Wall Street saying of "Sell in May, and go away" has not worked out for those investors who decided to take the summer off and start fresh later in the year, as the S&P 500 has broken through the 1,000 level. The market is now in the midst of stage two of its rally. It bottomed in the mid 600's in March 2009, and surged up to reach 950, before retrenching back to the mid 800's on profit taking and perhaps a little bit of disbelief by bruised and jaded investors. It then shot up like a rocket in July, hitting its present level of 1,000.

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Although some may call this a bear market rally, they can't deny its power. And of course, the way Wall Street works with its herd mentality, the higher the market moves the more investors will jump on, leaving the bearish crowd thinner and thinner.

So which sectors have done the best in stage two? If you exclude the almost suicidal double and triple leveraged instruments that have been created over the last few years, the two best performing Exchange Traded Funds (ETFs), during the July rally, are the S&P Homebuilders SPDR (NYSE:XHB) and the iShares Dow Jones US Home Construction (NYSE:ITB). Both are up around 37% in a month.

The best triple leveraged ETF was the Direxion Daily Financial Bull 3X Shares (NYSE:FAS), up 82%. On an individual stock basis, some of best names the last month with a market capitalization of more than $300 million are an odd mix from three different sectors.

Human Genome Sciences Inc. (Nasdaq:HGSI) got an artificial lift in the middle of the month when its drug to treat Lupus met its goals in a clinical study, lifting the stock 477% for the month. Radian (NYSE:RDN) soared 300%. This was the classic rage to riches story, which had been thrown out by investors who were terrified to own anything financial. The company came out with better than expected earnings and lowered its estimates of future claims as the housing market begins its recovery. Marty Whitman of the Third Avenue Fund must be very happy tonight, as he previously had a large position of more than 14% of this company. KKR Financial Holdings LLC (NYSE:KFN) is also up more than 300%. The company is a real estate investment trust (REIT) and is in the specialty finance business. The stock reacted positively as the company seemed to have put any liquidity concerns to rest with some recent transactions.

Investors who had the fortitude to defy the "experts" who preached doom and gloom about the economy were rewarded with major gains in their portfolios. What will the future hold? Only time will solve that mystery. (For more, read Buy When There's Blood In The Streets.)

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