The major averages quietly attempted to work their way above near-term resistance on Thursday, and the S&P 500 Index touched a new 2009 high against the backdrop of another successful auction from the Treasury Department and a batch of stronger-than-expected economic data.  Advancers led decliners by approximately a 2-to-1 ratio on the Nasdaq exchange and by approximately a 3-to-2 ratio on the NYSE. Volume totals were reported slightly higher than the prior session on the NYSE and Nasdaq exchange, which was a bit worrisome considering the major averages ended near their session lows. Interestingly, there were only 10 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 19 issues that appeared on the prior session.  A continued expansion in the new highs list would offer encouraging news for growth oriented investors. 

Early Thursday morning, the market received a batch of positive economic news. The Labor Department reported that initial unemployment claims slid to 601,000 last week. This was the lowest reading since January and supports last month's smaller-than-expected layoffs. A separate report showed that US retail sales rose in May for the first time in three months which suggests that the economy continues to recover. The US dollar resumed its free fall which helped lift a slew of commodities and the stock market. For a detailed analysis of the US dollar's relationship to both commodities and US equities please read last Wednesday's, June 3, 2009's CANSLIM.net Market Commentary (read here).

In other news, Bank of America Corp's (BAC +8.26%) CEO, Ken Lewis, testified in Washington about the bank's purchase of Merrill Lynch last September. Lewis was grilled by several congressmen and was asked if he felt pressured to buy the ailing investment bank. Obviously, Lewis was put in a very precarious situation, since he is currently still employed and regulated by the same forces (The Fed and the Treasury). Do you think he would be able to speak openly and honestly about what actually happened, knowing that he remains at the mercy of the exact same organizations? As the saying goes: "If it weren't so sad, it would be funny."

It was encouraging to see the major averages claw their way above resistance and the Nasdaq Composite and S&P 500 Indexes reach fresh 2009 highs on Thursday!  It is especially encouraging to see the major averages remain constructive as they advance in a healthy fashion. Since the major averages broke above resistance last Monday, June 1, 2009, this column has repeatedly mentioned how prior resistance levels should now act as support. To the market's credit, this is exactly what has occurred, which suggests that the bulls remain in control. Again, leadership remains relatively light on a historical basis, but it pays to stick with what is working and avoid what isn't. A great resource to find high-ranked stocks that are hitting new 52-week highs on any given day is CANSLIM.net's Breakouts Page (here).

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PICTURED: The S&P 500 Index hit a new 2009 high before pulling back and closing below resistance at the high end of its current base-on-base pattern.

Charts courtesy www.stockcharts.com 
 

PICTURED: The Oil Services Index ($OSX +2.74%) was a standout among commodity-linked groups as it rallied to a new 2009 high. Its 50-day moving average (DMA) line recently crossed above its 200 DMA line, which also indicates near-term strength.

HMS Holdings Corp (HMSY +$1.74 or +4.89% to $37.30) ended today's session at a new high close after it posted a decent gain on light volume.  It traded toward the high end of a near 5-week flat base above its 50-day moving average line, during which volume totals have been drying up. A new pivot point and max buy price were noted. Gains with sufficient volume are still needed to confirm a proper technical buy signal.  The Commercial Services - Healthcare firm rallied to a 52-week high on 5/12/09, but it failed to produce gains with the volume needed to trigger a very convincing "breakout" or proper technical buy signal under the investment system's guidelines. Gains above a stock's pivot point need at least the minimum +50% above average volume, ideally much more volume, to meet the guidelines for buyable breakouts.  Volume is a critical component to any breakout.  Only when volume surges meaningfully behind a breakout from a sound base pattern do investors have the very important proof of heavy institutional (the I criteria) buying demand.

A downturn in 2006 earnings is a fundamental flaw in HMS Holdings Corp's annual earnings history that raises some concerns with respect to the A criteria of the investment system.  Investors' odds are usually better with a company that has a steady 3-5 year earnings growth history.  Technically, it is within close striking distance of all-time highs, and there is a chance HMSY might trigger a buy signal. This stock was first featured on Friday, February 20, 2009 in the CANSLIM.net Mid Day Breakouts Report (read here), then dropped from the Featured Stocks list on 4/02/09 due to weak action, returning yet again in yellow in the mid-day report on 5/01/09.

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.