The major averages rallied during the first half of the week but gave back those gains on Friday's ugly distribution day. Volume jumped on Friday compared to Thursday's levels after the SEC charged investment giant Goldman Sachs (GS -12.79%) with fraud when they sold CDOs in 2007. Decliners trumped advancers by nearly a 4-to-1 ratio on the Nasdaq exchange and by nearly a 3-to-1 ratio on the NYSE. New 52-week highs still easily trumped new lows on both exchanges. There were 37 high-ranked companies from the CANSLIM.net Leaders List that made a new 52-week high and appeared on the CANSLIM.net BreakOuts Page, lower than the 89 issues that appeared on the prior session. A healthy crop of new leaders making new highs bodes well for any market rally. Regular readers know we have repeatedly noted in this commentary -"the recent expansion in leadership has been a welcome improvement."

Stocks edged higher on Monday after Greece received an international aid pledge to help it get through its worst financial crisis since WWII. After Monday's close, Alcoa Inc. (AA -2.80%) kicked off Q1 earnings season and reported a narrower Q1 loss, citing improving demand. Stocks ended higher on Tuesday shrugging off an ominous report that showed small business owners are still pessimistic on the economy. 

The major averages jumped above important psychological resistance levels after a slew of stronger than expected earnings and economic data were released. Intel Corp (INTC -1.24%), JP Morgan Chase & Co (JPM -4.73%) and railroad giant CSX Corp. (CSX -1.47%) all topped estimates and reported solid Q1 results. All three stocks gapped up on Wednesday which helped the benchmark S&P 500 and the tech-heavy Nasdaq Composite close above their psychologically important resistance levels for the first time since September 2008 (when Lehman failed). By Friday's close, the Nasdaq (2,500) and S&P 500 (1,200) both closed below their respective resistance levels while the Dow remained above 11,000.

Stocks were smacked on Friday after several high profile companies released their Q1 results and the SEC charged Goldman Sachs with fraud when they sold CDOs in 2007.  The major averages have been steadily rallying since early February and a pullback of some sort should be expected. The prior commentary's observation, "Since the March 1, 2010 follow-though-day (FTD) a handful of distribution days has not been the least bit damaging to the market's confirmed rally" - was immediately followed with the 6th distribution day for the S&P 500 Index, a sign of mounting pressure on this 7-week rally. Trade accordingly. 

Charts courtesy www.stockcharts.com

PICTURED: The Bank Index ($BKX -3.46%) was a standout decliner as Goldman Sachs (GS -12.79%) fell sharply in response to SEC fraud charges.  The Bank Index had rallied as much as +33.07% from its February low.

Bio-Reference Laboratories, Inc. (BRLI +$0.05 to $46.76) finished with a small gain and it has posted 8 consecutive gains. Its current Up/Down Volume Ratio of 2.0 is an unbiased indication its shares have been under accumulation recently. However, its latest consolidation for 4 weeks well above its 50-day moving average (DMA) line was considered too short to be a 5-week flat base, and volume behind its latest gains for new highs was not heavy.  Its recent chart low ($42.54 on 3/26/10) is an initial support level to watch, and it now coincides with its short-term average.

A gain on 3/04/10 with 2 times average volume lifted it solidly above its previously cited pivot point, confirming a technical buy signal. Its weekly chart is marked by many up weeks with above average volume and few down weeks on volume - very bullish characteristics. No resistance remains due to overhead supply now, which could allow for a significant sprint higher. Earnings growth and sales revenues growth has accelerated, with increases better than the +25% minimum guideline in recent quarters. Fundamentals are favorable with respect to the C and A criteria of the investment system. BRLI has only 13.9 million shares outstanding (S criteria) and has average daily volume under 100,000 shares, which could contribute to greater price volatility in the event of more decisive institutional buying or selling. The number of top-rated funds owning its shares rose from 77 in Mar '09 to 84 in Mar '10 which is somewhat reassuring in regard to the I criteria of the investment system.

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.