As the last full month of summer gets ready to close, US stocks ended higher for the week after trading in a very narrow range.  Advancers narrowly led decliners on the NYSE, but decliners outnumbered advancers by nearly a 2-to-1 ratio on the Nasdaq exchange. Volume totals were reported slightly higher on the NYSE and on the Nasdaq exchange versus the prior session which could be considered "churning" type action which is generally distributional. There were 22 high-ranked companies from the CANSLIM.net Leaders List that made a new 52-week high and appeared on the CANSLIM.net BreakOuts Page, higher than the 13 issues that appeared on the prior session. New 52-week highs solidly outnumbered new 52-week lows on both exchanges while new lows were in the single digits again.

On Monday, Asian stocks soared following Friday's strong performance in the US. That set the stage for a positive open in the US, but the buying demand quickly waned as fears returned that more bank failures were on the horizon. SunTrust Chairman and Chief Executive Officer James Wells III said in a speech at the Rotary Club of Atlanta that "This credit cycle has yet to play itself out...We do not expect things to improve for the banking industry in the very near future." He also said "the industry is a long way from declaring any sort of victory." Mr. Wells made it clear that he expects lenders to face more credit losses and commercial real estate may continue to decline through 2010. Elsewhere, famous bank analyst Dick Bove said he expects more 150-200 more banks to fail before we are out of the woods. Automobile companies slid as the "cash for clunkers" program entered its last day.

On Tuesday, the major averages closed with modest gains after US consumer confidence rose more than forecast and national home prices rose for the first time in three years! The Conference Board’s consumer sentiment index rose to 54.1 in August which was the first monthly gain since May. More positive news came when the S&P/Case-Shiller home-price index rose +2.9% in the second quarter from the previous three months. This was the first increase in home prices since the horrific housing depression began in 2006 and the largest gain in almost four years! President Barack Obama nominated Ben S. Bernanke to a second term (pending Senate approval) which is a strong vote of confidence in Bernanke's actions at the helm. Obama nominated Bernanke, who led the largest expansion of the Federal Reserve's power in its 95-year history to curb the worst financial crisis since the Great Depression, for a second four-year term starting January 31, 2010. In other economic news, the White House Office of Management and Budget released a forecast today that showed they believe the economy will grow +2% in 2010 which is less than the +3.2% forecast released in May. They also believe that unemployment will surpass the +10% level in 2009 and the budget deficit will swell to +$1.5 trillion next year, both higher than the prior estimates.

On Wednesday, stocks ended modestly higher after the government reported that durable goods rose +4.9% last month but the core component which strips out the highly volatile non-defense component (mainly transportation), slid -0.3%. The smaller than expected rise in core orders left many investors questioning the underlying health of the economy. Even a stronger than expected housing report failed to offset this concern. The Commerce Department said that new home sales jumped +9.6% in July which was the largest gain in four years to an annual rate of +433,000.

On Thursday, stocks positively reversed (overcame earlier weakness and closed higher) after the preliminary second quarter GDP report's headline number showed a better-than-expected -1.0% annualized decline. Consumer spending during Q2 also topped expectations by contracting -1.0%, an improvement from the previous -1.2% decline.  Meanwhile, initial jobless claims were reported in-line with expectations at 570,000, down 10,000 from the previous week.  Continuing claims at 6.13 million were below expectations and down more than 100,000 from the previous week as more unemployed workers lost their jobless benefits.

On Friday, stocks ended lower as the US dollar advanced. For the past few years, the inverse relationship between the US dollar and US stocks has been intact which means stocks tend to decline when the USD rallies and the converse is also true. Since the market is still in "rally mode" it is very important to remain objective and only buy the strongest stocks that are breaking out of the strongest bases.

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PICTURED: The Nasdaq Composite Index closed in a very tight range all week.

Modest gains from the financial group on Friday helped the Bank Index ($BKX +0.66%) and Broker/Dealer Index ($XBD +1.10%) post gains. The Gold & Silver Index ($XAU +1.82%) was also a positive influence while the Healthcare Index ($HMO -2.03%) was a clear laggard.  Energy shares showed little direction as the Integrated Oil Index ($XOI -0.35%) edged lower and the Oil Services Index ($OSX +0.15%) edged higher.  The Retail Index ($RLX +0.03%) finished flat. Small gains from the Internet Index ($IIX +0.28%), Networking Index ($NWX +0.37%), and Biotechnology Index ($BTK +0.49%) were outmatched by the Semiconductor Index ($SOX +2.44%) show below.

Charts courtesy www.stockcharts.com

PICTURED: The Semiconductor Index ($SOX +2.44%) blasted to a new 2009 high.  Among the chip group's big gainers on Friday were STMicroelectronics NV (STM +11.73%), Pixelworks Inc. (PXLW +13.71%), OmniVision Technologies Inc. (OVTI +12.26%), and Trident Microsystems Inc. (TRID +8.77%), none of which has the strong earnings history needed to earn high enough ranks to make it into the CANSLIM.net Leaders List.

Ebix Inc (EBIX +$3.36 or +6.97% to $48.18) was highlighted in yellow with new pivot point and max buy levels noted in the 8/28/09 CANSLIM.net Mid-Day BreakOuts Report today (read here) as it was reaching a new all-time high. It triggered a technical buy signal and closed the session near its intra-day high with a considerable gain backed by volume +81.94% above average as it cleared a cup-with-high-handle pattern after "3-weeks tight". It formed the big cup-with-high-handle shaped pattern (finding great support at its 50 DMA line) since weak action prompted it to be dropped from the Featured Stocks list on 10/07/08. Sales and earnings increases in quarterly comparisons have been strong, but they have shown steady sequential deceleration which is of some concern. 

EBIX traded up more than +59% after it was first featured in the March 2008 CANSLIM.net News (read here). At that time its 50-day average daily volume was only 4,900 shares, whereas today its average volume is at 84,000 shares. Today there are 6.62 million shares (the S criteria) in the public float, so its share price still could be very volatile in the event of heavy institutional buying or selling. The number of top-rated funds owning an interest in its shares rose from 31 in Dec '08 to 54 in Jun '09, which is a good sign concerning the I criteria of the investment system. Do not be confused by the 3:1 split that took effect on 10/09/08. It has rebounded impressively and cleared its August '08 highs in the $40 area recently, after steadily climbing from this year's lows in the $17 range.

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.