The major averages experienced their largest gain in several weeks after a series of takeovers were announced. As expected, Monday's volume totals were lower than the prior session on both major exchanges due to the Jewish Holiday which left many trading desks understaffed. Advancers trumped decliners by nearly a 4-to-1 ratio on the NYSE and by a 3-to-1 ratio on the Nasdaq exchange. There were 20 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 from the 6 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.

Investors bought stocks after a series of mergers and acquisitions (M&A) were announced from drug and technology companies. Affiliated Computer Services Inc.(ACS +13.99%) jumped nearly +14% after Xerox Corp. (XRX -14.38%) made its largest purchase by agreeing to buy the company for $6.4 billion. In the pharmaceutical space, Abbott Laboratories (ABT +2.64%) said it planned to purchase Solvay SA’s pharmaceutical unit and gain control of the TriCor cholesterol drug for $6.6 billion. After the acquisition, the Abbott will have a larger presence in emerging markets and lower its dependence on the arthritis drug Humira.

There are only two more trading sessions left in the third quarter. Barring some unforeseen event, this will be the strongest third quarter performance for the major averages since 1939 - and no, that is not a typo!  Earnings season will officially begin next week when Alcoa (AA +2.68%), the first Dow company to release results, announces how they did on October 7th.  As always, one might expect earnings seasons to play a pivotal role in this rally. So far, it is very healthy to see the major averages rally, which is perhaps a sign that last week's pullback may not lead to further downside testing.  It remains imperative to continue watching the market and leading stocks for the best "read" on the underlying health of this rally.

PICTURED: The IBD 100 Index found support above its prior chart highs Monday and held its ground.

Charts courtesy www.stockcharts.com

PICTURED: The Gold & Silver Index ($XAU +0.39%) was clearly a relative laggard on Monday, and it ended near the session low.  It recently slumped under its old high closes, which may also raise some concerns for those who are bullish on gold-related stocks.

W N S Holdings Ltd Ads  (WNS +$0.24 or +1.58% to $15.20) has formed an orderly flat base for at least 5-weeks, and it was featured in yellow in today's mid-day report (read here). It encountered resistance in the $16 area last week while consolidating just above important support at its 50-day moving average (DMA) line. The recent high-volume and lack of meaningful upward price progress chart-wise may be considered "churning" action, indicative of distributional selling pressure offsetting new buying efforts.  Quarterly earnings have been above the +25% guideline and its annual earnings history has been great, satisfying the C & A criteria. However, sales revenues growth has decelerated, raising some concerns.  Only 14.5 million shares are in the public float, which is considered a good characteristic concerning the S criteria, and could contribute to greater volatility in the event of any heavier institutional buying or selling that may come. 

For now, the high-ranked Indian Commercial Services might be an ideal candidate for investors' watch lists, while disciplined investors would be patient to wait for a bullish technical buy signal.  Gains above the pivot point with at least +50% above average volume or more are still needed to confirm a new technical buy signal.  Meanwhile, any deterioration under recent lows or its 50 DMA line would raise concern and trigger technical sell signals.

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.