The major averages ended mixed again after a private report from ADP showed employers cut more jobs than expected last month and some Federal Reserve officials said they are willing to entertain the notion of more stimulus measures in 2010. Volume, an important indicator of institutional sponsorship, was reported lower than Tuesday's totals which indicated large institutions were not aggressively dumping stocks. Advancers led decliners by a 3-to-2 ratio on the NYSE, but decliners narrowly led advancers by a 5-to-4 ratio on the Nasdaq exchange. There were 57 high-ranked companies from the CANSLIM.net Leaders List that made a new 52-week high and appeared on the CANSLIM.net BreakOuts Page, slightly lower than the total of 58 issues that appeared on the prior session. New 52-week highs solidly outnumbered new 52-week lows on the NYSE and on the Nasdaq exchange, and new lows were again in the single digits.

Before Wednesday's opening bell, ADP Employer Services Inc., the country's largest private payrolls firm, said US employers slashed -84,000 jobs in December which fell short of the Street's estimate of -75,000. The ADP report usually sets the tone for the government's official non-farm payrolls report each month. At this point, economists believe that Friday's report will show payrolls were unchanged in December which will be the first month employment did not decline since the recession began two years ago.

At 10:00AM EST, the Institute for Supply Management (ISM) released a weaker than expected report on the service sector. Its non-manufacturing business index rose to 50.1, from 48.7 in the prior month. The reading topped the boom/bust level of 50 which shows growth but fell short of the 50.5 consensus. The ISM surveys nearly 400 firms from 60 sectors across the country which include: agriculture, construction, transportation, mining, communications, wholesale and retail trade. It is important to note that the service sector currently makes up approximately +90% of the economy and tends to be a good proxy for GDP.

At 2:00PM EST, the Federal Open Market Committee (FOMC) released the minutes of its last meeting in 2009. The minutes for the December 15-16 FOMC meeting showed that several Fed officials are open to the notion of further stimulus measures, if needed, in 2010. Fed governors and District presidents had different opinions on whether or not inflation was a concern at this point of the economic recovery, although they did agree that inflation currently is not a threat. The Fed modestly upgraded the overall economy and said that downside risks "diminished a bit further."  The next Fed decision will be announced at 2:15PM on Wednesday, January 27, 2010.

Stocks remain strong as investors digested the latest round of weaker than expected economic data. Friday's jobs report will likely set the stage for the next move in the market. Until then, expect investors to avoid putting on excessive risk as they await the jobs report for a better reading on the economy. The current rally is in the middle of it 44th week (since the March 2009 lows) and on all accounts still looks strong. In addition, most bull markets last for approximately 36 months, so the fact that we are beginning our 10th month suggests we have more room to go. The Dow Jones Industrial Average, small cap Russell 2000 Index, S&P 500 Index and Nasdaq Composite and NYSE Composite indices are all trading above their respective 2009 highs, which also bodes well for this rally. Leadership is beginning to expand which is a welcome sign, and ideally it will continue to expand over the next few weeks as the major averages continue advancing.

PICTURED: For the new year, the Dow Jones Industrial Average is up +1.4%. Getting off to a good start generally bodes well for the market, however investors should continue to monitor the major averages and the action in the market's leading stocks for the best read on the M criteria.  Stay tuned to the daily CANSLIM.net reports to keep yourself well informed throughout 2010.  We invite your feedback and any suggestions you may have on how CANSLIM.net can make your day-to-day application of the proven investment system easier.  Please take time to use the inquiry form if there is anything you think we should know.  Thank you!

Charts courtesy www.stockcharts.com

PICTURED: The Biotechnology Index ($BTK +1.22%) has rallied near its September 2009 high, a sign of strength that generally bodes well for individual equities in the biotech group.

Salesforce.com, Inc. (CRM -$0.13 or -0.17% to $74.37) has been stubbornly holding its ground, perched very near its $75 all-time high from 2008. Prior chart highs in the $67 area are an important support level to watch now. A powerful rally into new all-time high territory with heavy volume would be a noteworthy sign of institutional buying demand.  However, it is now extended from its latest sound 5-week flat base above important support at its 50-day moving average (DMA) line. Its 12/18/09 gain with more than +50% above average volume triggered a technical buy signal.  For its 12/18/09 mid-day report appearance its color code was changed to yellow and a new pivot point based upon its 11/16/09 high plus 10 cents was noted. A convincing breakout above its prior chart high that day with at least +50% above average volume was all that it took to trigger the latest technical buy signal.

With the reassurance of additional heavy institutional buying (the I criteria) demand, add-on buying might be worth considering if it surges again.  But be careful not to average your cost up too much by only buying smaller amounts at higher levels. On pullbacks, shares owned at a lower cost basis may be held, but always limit losses by selling the shares bought later if the stock falls -7% from your higher buy price. 

Color Codes Explained :
Y - Better candidates highlighted by our staff of experts.
G - Previously featured in past reports as yellow but may no longer be buyable under the guidelines.