The major averages ended lower as the US dollar surged on Thursday. Volume, a critical component of institutional demand, was higher on the Nasdaq exchange and near the prior session total on the NYSE. Decliners trumped advancers by about a 4-to-1 ratio on the NYSE and by about a 3-to-1 ratio on the Nasdaq exchange. There were 22 high-ranked companies from the CANSLIM.net Leaders List making a new 52-week high and appearing on the CANSLIM.net BreakOuts Page, less than half of the 47 issues that appeared on the prior session. In terms of new leadership, it was encouraging to see new 52-week highs outnumber new 52-week lows on the NYSE and Nasdaq exchange.

The stock market and a slew of commodities sold off on Thursday as the US dollar rallied. The US dollar rallied against 15 of 16 major currencies after the Federal Deficit soared to a new record of $176.4 billion  in October. Elsewhere, billionaire investor Warrent Buffett said the financial panic is over according to Reuters.com.

Stocks sold off after Hewlett-Packard (HPQ -0.60%) announced plans to acquire 3Com (COMS +31.11%). 3Com surged a whopping +31% on the news and enjoyed its single largest advance since 2007 on the $2.7 billion deal. This helped send a slew of computer networking stocks higher.
 
Technically, the S&P 500 Index, which enjoyed a 13-month high yesterday, failed to stay above the 1,100 level for a second straight day. Since late October, 1,100 has served as important resistance for this index. That said, the fact that the S&P 500 remains perched below that level after having rallied +61% from its 12-year low in March and recovering nearly half of its steep decline from its all-time high in October 2007 is a very impressive feat. The S&P 500 currently sports a price-to-earnings (p/e) ratio of 21.81 which is the highest level since 2002. So far, over 80% of S&P 500 companies that reported Q3 results have topped estimates which has helped the market hold up rather well considering that profits were negative for a record ninth consecutive quarter. 
 
What does all this mean for growth investors? Be patient and continue to watch for leading stocks to breakout of sound bases. Do not force a trade and let the market come to you; i.e. do not chase. It is also important to remain cognizant of what is working in this environment: mainly buying very liquid large cap leaders as they bounce off their 50-day moving average line or breakout of sound bases. Some of those leaders include: Apple Computer (AAPL  +0.62%), Amazon (AMZN +0.48%), Priceline.com (PCLN +0.18%), Google (GOOG -0.47%), and Baidu Inc. (BIDU -0.78%). The action in these names have served as a great proxy for the overall rally which began in March 2009. Jesse Livermore's timeless advice is true once gain, "Follow The Leaders."

Charts courtesy www.stockcharts.com

PICTURED: The Networking Index ($NWX +0.60%) was Thursday's only positive index among those regularly followed in this IGW section. Intra-day it traded above its 50-day moving average line but it closed below that important short-term average.

AsiaInfo Holdings, Inc. (ASIA -$1.50 or -5.86% to $24.11) suffered a considerable loss today with above average volume, yet it is still extended from its latest sound base. Gains with above average volume helped it rally to new 2009 highs following a 10/29/09 gap up for a big gain after reporting solid earnings for the period ended Sept 30, 2009 that beat expectations as it also raised guidance. It found prompt support near its 50-day moving average (DMA) line, a textbook chart support level, after a 7 session losing streak with losses on high volume triggered technical sell signals and briefly negated its latest breakout.

Featured 10/14/09 in the mid-day report (read here) as it gapped up for a new 52-week high with 5 times average volume, triggering a technical buy signal by blasting above its pivot point.  Disciplined entries and exits are critical to investors' success with the investment system. ASIA was first featured in the August 2009 CANSLIM.net News (read here).

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.