In screening for basic material stocks using the ValuEngine.com Valuation Model, I found seven companies that are more than 40% overvalued.

FORBES: Book Profits On Overvalued Basic Material Stocks Now

With those fears having subsided, investors are returning to the sectors that traditionally fare well in strong market rallies: economically sensitive financial, consumer and material stocks.

WSJ: Stocks Pare Gains

As I noted in my Week Ahead column, the action of the financial and material stocks may be an important development for the overall market.

FORBES: 2 Breakout Banks to Watch

Financial and material stocks notched the biggest declines.

WSJ: Dow Gains 5.5% in 2011, as S&P Ends Flat

Basic material stocks pushed the market higher.

FORBES: U.S. Adds Surprising 146K Jobs In Nov.; Unemployment Down To 7.7%

Basic material stocks also rallied.

FORBES: ADP: U.S. Hiring Surged In August With 201,000 New Jobs

And with no fixed supply of raw material, unlike stocks or bonds, bets could be almost limitless.

ECONOMIST: Credit derivatives

Before relying on the opinions expressed in this article, you should assume that Marketocracy, its affiliates, clients, and I have material financial interests in these stocks.

FORBES: Buffett Next Door Advice: Give Your Portfolio A Split Personality

Health care reform in the United States is in its infancy, and despite the pressure it has put on stocks, its material impact has yet to be felt.

FORBES

Material, energy and industrial stocks also posted gains.

WSJ: Dow Surges 490 Points

Before relying on the opinions expressed in this article, you should assume that Marketocracy, its affiliates, clients, and I have material financial interests in these stocks and may hold or trade them contrary to these opinions when, in our view, market conditions change.

FORBES: When To Give A Top Manager Money; When To Pull It Out

This will allow them, for instance, to demand to be shown evidence of what has become of missiles that could be filled with chemical or biological agents, or the stocks of previously uncovered material that might be used to make such weapons.

ECONOMIST: The inspections begin

Finally, Mr. Miccolis tells of a client who came across some promotional material for what looked like a portfolio of stocks that would have tripled the client's money in eight years.

WSJ: How Mutual Funds and Managers Massage Their Numbers, Legally