Although we try to stick with the primary sectors within our Sector Spotlight, the best opportunities of late have remained within the specific -- and somewhat obscure -- industries. Our recent calls on automobile manufacturers, toys, and medical supplies companies are all verification that traders still have to pick and choose carefully. As much as we'd like to go back into the mainstream today , we can't. Today's spotlight is on water companies, and their impressive relative strength.

By April of this year, traders wanted nothing to do with water companies. The Dow Jones Water Utilities Index (DJUSWU) had seen a phenomenal 2005, moving from a low of 492 to as high as 822 by October. By the middle of October, the index had fallen all the way back to 643, only to rebound just as sharply and climb back to as high as 816 by December. No, these stocks seemed almost bullet-proof, even in the wake of a major pullback. It wasn't until March of this year these stocks started to take hits they actually couldn't overcome.

The peak of 828 in early March proved to be about as high as the bulls were willing to let this index go. The immediate (and sharp) dip kick-started a selloff that would last 15 weeks, and ultimately end when the index hit a low of 567 in June. By that point, most buyers (or would-be buyers) had already lost interest, unable to shake off what they had seen that spring. However, at this point, we'd recommend everybody put these stocks back on their proverbial radar. The  Dow Jones Water Utilities Index is up to 656, and still climbing. That's a 15.6% rally off of that June low. For perspective, the S&P 500 is only up 7.8% from its June low.

As for how these stocks got back on our bullish watchlist, take your pick of various signals. One of our primary tools - the MACD lines - made a crossover in early August, while the index itself crossed back above its 100 day line last week. What's just as bullish, although much more difficult to define in mechanical terms, is the persistently bullish volume for these stocks, even when they were in their downtrend. The accumulation-distribution line, albeit in a very volatile fashion, has continued to rise. And, a closer look at the red-vs-green volume bars shows a much stronger buyback between May and now than strength of selloff in March and April.

We'll set a target of 810 for the Dow Jones Water Utilities Index. Stops on this bullish bias come with any weekly close under 631, where the 50- and 100-day lines are currently resting.

Dow Jones Water Utilities Index (DJUSWU) - Weekly

Price Headley is the founder and chief analyst of BigTrends.com.