The major averages did not produce a sound follow-through day (FTD) because volume totals behind Thursday's gains were reported slightly lower than the prior session on both major exchanges. This marked Day 4 of the current rally attempt, which means as long as Monday's lows are not breached a new FTD could emerge if one or more of the major averages rallies at least 1.7% on heavier volume than the prior session. The market remains in a technical "correction" until a proper FTD emerges, so the investment system's M criteria argues against new buying efforts. Advancers easily trumped decliners by a 4-to-1 ratio on the NYSE and by over a 3-to-1 ratio on the Nasdaq exchange. There were 20 high-ranked companies from the CANSLIM.net Leaders List making a new 52-week high and appearing on the CANSLIM.net BreakOuts Page, higher than the 16 issue that appeared on the prior session. In terms of new leadership the recent action has yielded little worth noting, however new 52-week highs are still outnumbering new 52-week lows on the NYSE and Nasdaq exchange. 

Two primary catalysts which sent stocks charging higher on Thursday were a stronger than expected Q3 earnings report from Cisco Systems (CSCO +2.75%) and a drop in unemployment claims. After Wednesday's closing bell, Cisco surprised the Street when they released their Q3 earnings. The stock gapped up as volume surged to its highest level this quarter. Meanwhile, the Labor Department said jobless (laid-off employees seeking unemployment benefits) claims fell to 512,000 last week which was the lowest level since January and fewer than expected. The stronger than expected jobless claims coupled with Wednesday's stronger than expected ADP report bodes well for Friday's official unemployment report. At this point, the consensus is that employers slashed -175,000 jobs in October which will be the smallest decline since August 2008 while the unemployment rate probably rose to +9.9%, up from September's reading of +9.8%. So far, the US economy has shed -7.2 million jobs since the recession began in December 2007.

Worker productivity jumped to the fastest pace in six years as labor costs fell according to the latest report from the Labor Department. Worker productivity measures each output per hour for each employee, rose at a +9.5% annual rate in the third quarter which topped the highest forecast on Wall Street. It was very interesting to see productivity jump in the third quarter because this followed a revised +6.9% increase in the second quarter and marked the largest consecutive quarterly gain in productivity since 1961. The productivity report showed hours worked declined at a -5% rate while worker output rose at a +4% clip. Hourly compensation rose at a +3.8% annual pace which is up from a +0.3% rate in the second quarter. Elsewhere, Bloomberg.com reported that the US Senate approved a $45 billion plan to expand a tax credit for first-time home buyers, extend jobless benefits and provide tax refunds for companies that lose money.

PICTURED: The Nasdaq Comoposite Index rallied +2.42% but failed to produce a proper FTD because volume was lighter than Wednesday's already light levels.

Charts courtesy www.stockcharts.com

PICTURED: The Integrated Oil Index found support near 50-day moving average line during recent consolidations.

Credit Acceptance Corp (CACC -$0.35 or -1.02% to $34.00) has been quietly consolidating since its impressive positive reversal was noted on 11/02/09. Prior chart highs and its 50-day moving average (DMA) line coincide in the $32 area, an important level to watch on pullbacks.  It had posted 10 consecutive gain for a new high close well above its "max buy" level when it last appeared in this Featured Stock Update section on 10/15/09 with an annotated graph under the headline, "Finance Firm Extended After 10-Day Winning Streak."  The high-ranked Finance-Consumer/Commercial Loans firm's 9/29/09 breakout gain was backed by more than 2 times average volume. Since featured it has also risen above its 2006-2007 highs ($33-34) to new all-time highs, which is a very reassuring sign of strength. CACC was featured in yellow in the 9/29/09 mid-day report (read here).

Investors might consider a light volume pullback to offer an opportunity to accumulate shares without chasing them more than +5% above its prior chart highs. However, market conditions (M criteria) have recently been noted as an overriding concern suggesting that investors hold off on any new buying efforts.  The lighter NYSE volume total reported today left the new rally effort still in need of a confirming follow-through-day, and there remains a clear lack of new leadership.  For any sustainable rally, the market needs a healthy crop of stocks rising for new highs on heavier that normal volume.

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.