The major averages ended mixed on Tuesday causing the S&P 500 Index to snap a 6-day winning streak. Volume expanded versus the prior session, however the benchmark index's loss was so slight that it barely amounted to a distribution day of any concern. Decliners led advancers by about a 4-to-3 ratio ratio on the NYSE and 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, sharply lower from the 71 issues that appeared on the prior session. New 52-week highs still substantially outnumbered new 52-week lows on both major exchanges.

The bears showed up but failed to make any significant headway on Tuesday after a slew of financial stocks faced selling pressure. Goldman Sachs (GS -1.54%) gapped down after Meredith Whitney downgraded the company and said she was “far less bullish” on banking shares. Whitney cut the bank to “neutral” from "buy" and said investors should sell the stock and book their profits (if applicable) considering the company has more than doubled since the March low. Whitney became famous in 2007 when she called the top of the credit and subprime markets. Goldman is slated to announce earnings on October 15th.

So far, earnings season has been lackluster at best. Analysts believe that the average company in the S&P 500 Index will report a ninth consecutive quarter of declining profits which will be the longest losing streak since the Great Depression. Wall Street believes that earnings growth will resume in the fourth quarter of this year. Remember that over the next few weeks as companies continue reporting in droves expect that data to play a pivotal role on what happens to this mature rally. Furthermore, as long as the major averages continue trading above their respective 50 DMA lines, expect this healthy rally to continue!

PICTURED: The Nasdaq Composite Index closed higher and remains perched just below resistance at recent chart highs (2,168).

The Gold & Silver Index ($XAU +1.82%) posted a standout gain while the Healthcare Index ($HMO -2.30%) was one of Tuesday's worst laggards.  The energy group showed mixed action as the Oil Services Index ($OSX -0.80%) lost ground and the Integrated Oil Index ($XOI +0.22%) posted a small gain. Financial shares created a drag on the major averages as the Broker/Dealer Index ($XBD -1.04%) and Bank Index ($BKX -0.44%) fell modestly. Positive action from the Retail Index ($RLX +0.88%) and Internet Index ($IIX +0.47%) was offset by losses from the Biotechnology Index ($BTK -1.14%), Semiconductor Index ($SOX -0.31%), and Networking Index ($NWX -0.13%).

Charts courtesy www.stockcharts.com

PICTURED: The Retail Index ($RLX +0.88%) rallied to a new 2009 high.

Ebix Inc (EBIX +$0.02 or +0.03% to $60.80) held its ground today after a gap up gain on 10/12/09 for a new all-time high. It is very extended from any sound base and well above support at its 50-day moving average (DMA) line, and more than +84% above its 200 DMA line, which are reminders to be watchful for sell signals. It endured some distributional pressure in September but found support at prior chart highs and its 50 DMA line in the $45 area.  EBIX has rallied as much as +33.5% 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. Prior to that, 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. As shown in the annotated graph below, earnings increases in quarterly comparisons have been strong and above the +25% guideline, but previously noted earnings deceleration is of some concern.  It is preferred when earnings growth is strong and accelerating, not losing steam.

EBIX had 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 192,200 shares. Today there are 10.6 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 58 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.

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.