Covariance learning is a powerful type of Hebbian learning, allowing both potentiation and depression of synaptic strength. It is used for associative memory in feedforward and recurrent neural network paradigms. This article describes a variant of covariance learning that works particularly well for correlated stimuli in feedforward networks with competitive K-of-N firing. The rule, which is nonlinear, has an intuitive mathematical interpretation, and simulations presented in this article demonstrate its utility.