As discussions began in Europe on containing the continent's debt crisis, reports said the European Central bank may consider borrowing against the existing bank bailout fund to increase its effective size. They were said to be debating re-starting covered-bond purchases, and they were not ruling out a cut in interest rates.

Financial stocks were stronger. Treasury yields rose from almost record lows as stocks rallied. German bank Deutsche Bank (DB +12.16%) rallied in New York trading. Berkshire Hathaway Class B (BRKB +8.62%) rose after the company announced a stock buyback program, the first share repurchase program by Buffett in four decades.

Technology stocks had to battle weakness in Apple Inc (AAPL -0.28%), which pared its early loss, but struggled after an analyst said the company is cutting orders to vendors in its supply chain for the iPad tablet computer. Energy and mining sectors were at the forefront of Monday's revival as commodities reversed early declines.

Dow component Boeing Co's (BA +4.20%) shares finished higher after delivering to All Nippon Airways its first 787 Dreamliner more than three years behind schedule. Homebuilding stocks were little changed as investors appeared numb to the latest weak report on U.S. housing. New home sales declined in August to a six-month low. The biggest drop in prices in two years failed to lure buyers away from even less expensive distressed properties.

The market environment (M criteria) is clearly under pressure and back in a correction after the heavy wave of distributional action last week. The latest confirmed rally may, at best, be considered barely alive by the fact that the Nasdaq Composite Index and S&P 500 Index are still fighting to stay above their respective Day 1 (8/09/11) lows.

The September 2011 issue of CANSLIM.net News is now available - (click here).  The Q3 2011 Webcast airs on Wednesday, September 28th at 8PM EST.  Links to all prior reports and webcasts are available on the Premium Member Homepage.

PICTURED: The S&P 500 Index faces near-term resistance at its 50-day moving average (DMA) line and recent chart highs.

Charts courtesy www.stockcharts.com

PICTURED: The Bank Index ($BKX +5.29%) posted a standout gain today while bouncing back from last week's lows.

Copa Holdings Sa (CPA +$1.12 or +1.80%  to $63.51) posted a gain today with above average volume.  An annotated weekly graph was included as it was highlighted in yellow in the 9/21/11 mid-day report (read here) while forming a cup-with-high-handle type base pattern with a pivot point based on its 9/14/11 high. However, it finished that session on a sour note with a loss that was the first in a streak of 3 consecutive losses with above average volume including a 9/22/11 gap down that violated its 50-day moving average (DMA) line raising concerns. 

It is normally best if the volume totals are light while a "handle" is formed, so it was noted that the distributional loss it immediately suffered may not bode well. Additionally, as it was noted - "Confirming gains with heavy volume for a new high close are needed before disciplined investors might consider this high-ranked Panama-based airline a legitimate buy candidate."  It reported earnings +52% on +41% sales revenues for the quarter ended June 30, 2011 versus the year ago period. Sales revenues and earnings have improved in the 3 most recent quarterly comparisons (Dec '10, Mar and Jun '11) after a streak of negative or weak comparisons. Annual earnings (the A criteria) growth has been good, and increasing institutional ownership (the I criteria) is an encouraging sign.

It may again find support above its 200 DMA line and prior highs in the $59 area like it did during its recent consolidation. The Accumulation/Distribution rank has slumped from a C+ when last shown in this FSU section on 9/21/11 to a D- today (see red circle). It obviously has some work to do before it might reach a new 52-week high and rally again within close striking distance of its 2007 all-time high ($73.33). In the meanwhile, any fundamental disappointment could hurt its chances of becoming an action-worthy buy candidate. A poor market environment (M criteria) also argues for now against new buying efforts until there is a new confirmed rally.

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.