The major averages closed lower one day after negatively reversing on Wednesday. Each of the major averages is now on track for a negative reversal on a weekly basis. If this occurs, then this will be the first negative reversal on a weekly basis since the rally began 29 weeks ago. Volume was higher than the prior session on the NYSE which marked a distribution day for the NYSE averages and suggests a pullback of some sort may continue to unfold.  Nasdaq volume was reported slightly lower, however decliners led advancers by over a 3-to-1 ratio on both the NYSE and Nasdaq exchange. There were only 13 high-ranked companies from the CANSLIM.net Leaders List that made a new 52-week high and appeared on the CANSLIM.net BreakOuts Page, sharply lower from 33 issues that appeared on the prior session. New 52-week highs outnumbered new 52-week lows on both exchanges, while new 52-week lows were in the single digits yet again.

The market opened higher, turned lower, then with two hours left in the session began advancing again. However, the advance was not strong enough to erase earlier losses, and the major averages closed lower for a second straight day. It is very important to pay attention to see how the market closes on Friday. If the market does not rally and closes lower on a weekly basis then that will put serious pressure on the current rally.  Conversely, if the bulls show up and send prices higher that will bode well for this 6-month old rally. Now that the market is beginning to show signs of weakness, it is very important to closely watch your stocks and act quickly if/when they begin triggering technical sell signals.

The National Association of Realtors said that existing US home sales unexpectedly fell last month for the first time since March. The report showed that purchases slid by -2.7% in August to a 5.1 million annual rate which was the second-highest level in the last 23 months. The median price also dropped -12.5% from August 2008 as the country continues to recover from the worst economic meltdown since the Great Depression. Elsewhere, the Labor Department said that unemployment claims declined last week.

BlackBerry maker Research In Motion (RIMM -3.16%) reported weaker quarterly profit and an outlook that fell short of analyst expectations after Thursday's closing bell, sending its shares down considersably in after-hours trading.

Charts courtesy www.stockcharts.com

PICTURED: The Broker/Dealer Index ($XBD -4.05%) pulled back sharply toward an upward trendline connecting its July-September lows.

Ebix Inc (EBIX -$0.45 or -0.96% to $46.82) has shown recent weakness indicative of distributional pressure while consolidating toward important support at prior chart highs and its 50-day moving average (DMA) line in the $44-45 area.  It has struggled since another wild whipsaw-like shakeout briefly tested support, much like its shakeout in mid-August nearly tested prior chart highs. As shown in the annotated graph below, earnings increases in quarterly comparisons have been strong and above the +25% guideline, but previously noted "steady sequential deceleration" is of some concern.  It is preferred when earnings growth is strong and accelerating, not losing steam.

Volatility like we have recently seen serves as a reminder for investors to always make disciplined buys and sells!  EBIX rallied as much as +19.76% since featured in yellow in the 8/28/09 CANSLIM.net Mid-Day BreakOuts Report (read here) as it was reaching a new all-time high. It has erases most of its gains since a technical buy signal was triggered 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.

EBIX traded up more than +59% after it was first featured in the March 2008 CANSLIM.net News (read here). At that time its average daily volume was only 4,900 shares, whereas today its average volume is at 137,800 shares. Today there are 8.09 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 59 in Jun '09, which is a good sign concerning the I criteria of the investment system.  Return on Equity is now reported at +42%, well above the +17% guideline. 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 high (the $40 area) in July, 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.