If the fundamentals remain intact, stick with it.

That's the message from Mike Shinnick, portfolio manager of Wasatch Advisors Long/Short Fund. The 4-Star fund specializes in a top-down focus, meaning Shinnick starts with the state of the economy and works backward to find companies and industries that stand to benefit from the current situation.

Case in point, Shinnick sees a high, but declining, unemployment rate, and he sees it working to the benefit of quintessential value retailers Wal-Mart (WMT) and Target (TGT), but also boosting the business of disability insurer Unum (UNM) simply because having more people in the workforce typically brings more premiums.

Lesson two of my Purple Crayon series focuses on breakouts, fake-outs and how to discern between the two.

Let's talk about the S&P500's break over the "double top," which had been in place around the 1,345 level. As widely noted, earnings, a somewhat suspiciously sanguine Fed presser and general market animal spirits have taken the only stock index that matters about 1 percent over the peaks of February and early April. What does this mean? To this trader, it means a long-side trade set-up in the S&P with the following guidelines: Get long here and stop out if and when we close somewhere in the 1,330s, especially on large volume. This is barring a large gap to the downside that gives traders a decent-probability shot at a gain with a couple percent as a stop.

In traderdom, there's nothing that brings a smile to your face faster than a shot at "unknown but large upside with relatively low risk."

Since I'm incapable of being entirely cheery, I use some charts of recent market leaders to