The major averages opened lower but rallied back in the final hour and closed in the upper half of the session's range on Monday. Decliners trumped advancers by nearly a 2-to-1 ratio on the NYSE and the Nasdaq exchange. Volume was reported lower than the prior session on both major exchanges which indicated that large institutional investors were not aggressively dumping stocks. There were only 8 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 17 issues that appeared on the prior session.  The greater expansion recently occurring in the new highs list has offered encouraging news for growth oriented investors.

Before Monday's opening bell, McDonalds (MCD -1.92%) said same store sales rose +5.1% last month which topped the Street's view of +4.2%. However, the hamburger chain gapped down to its 200 day moving average before finding support and closing in the upper half of its intra day range. The stock got hit after the company said a stronger US dollar may hurt profits for the remainder of the year. The US dollar edged higher which weighed on stocks and a slew of commodities before pulling back in afternoon trade.

Around 1:00 PM EST, Apple Inc. (AAPL +0.57%) announced a handful of upgrades to its existing product line. The company said they are going to release a new version of their very popular iPhone. The new version, 3GS, will be less expensive and faster. The added "S," stands for speed. In addition, the company updated its MacBook Pro line with a built in battery that will last +40% longer than current batteries. The stock traded lower but closed near its intra day high as buyers emerged and scooped up shares.

It was encouraging to see the major averages defend support. Since breaking out last Monday (6/1/09), the market has retested its prior chart highs (formerly resistance) a few times. So far, each time the major averages manage to rally in the afternoon and close above support. Remember that the bulls remain in control until support is breached. Leadership remains scant as there are only a few high quality stocks that are "working" at this point. If this market is going to start a new leg higher then one would like to see a new batch of leadership emerge over the days and weeks ahead. Until then, proceed with caution and always protect yourself by selling a stock if it drops 7-8% below your purchase price.

PICTURED: The Dow Jones Industrial Average bounced off support (formerly resistance) on Monday.

The Bank ($BKX +1.29%), Retail ($RLX +0.57%) and Gold & Silver ($XAU +0.27%) indices were the three standout leaders on Monday. The rest of the groups were not so fortunate. The Semiconductor ($SOX -0.06%), Broker/Dealer ($XBD -0.16%), and Integrated Oil ($XOI -0.10%) indexes closed with modest losses. The afternoon rally helped the Broker/Dealer ($XBD -0.17%), Biotech ($BTK -0.67%), Networking ($NWX -0.69%) and Oil Services ($OSX -0.87%) groups close with modest losses. The Internet ($IIX -1.27%) and Healthcare ($HMO -3.78%) groups closed firmly in the red.

Charts courtesy www.stockcharts.com

 

PICTURED: The Bank ($BKX +1.29%) index continued consolidating its recent move.

Green Mountain Coffee Roasters (GMCR $2.12 or +2.32% to $93.54) vaulted to a fresh all-time high on Monday after recently breaking out of a high tight flag. GMCR's most recent Featured Stock Update appearance was on Tuesday May 26, 2009 under the headline "Possible High Tight Flag Pattern For High Ranked Leader" (read here). The article identified that this issue may be forming a "high tight flag" pattern and identified the bullish traits that were occurring at the time. The story said, "This type of setup can occur when a stock doubles in 4 to 8 weeks, then moves sideways, correcting 10-20% in 3-5 weeks.  The buy point is the high before the sideways movement, and gains backed by sufficiently heavy volume are required to trigger a proper technical buy signal." The new technical buy signal was triggered on June 2, 2009 when this stock traded above $85.35 and enjoyed a fresh new high close. Since then, GMCR has rallied nearly +10% and is currently too extended to be considered buyable under proper guidelines. 

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.