The major averages edged higher on Monday after Abu Dhabi announced it would bail out Dubai World and Exxon Mobil Corp (XOM -4.31%) announced plans to buy XTO Energy Inc. (XTO +15.35%) for $31 billion. Volume, an important indicator of institutional sponsorship, was reported higher than Friday's totals on the NYSE and on the Nasdaq exchange which was a healthy sign. Advancers led decliners by nearly a 3-to-1 ratio on the NYSE and by about a 2-to-1 ratio on the Nasdaq exchange. There were 51 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 than the total of 25 issues that appeared on the prior session. New 52-week highs substantially outnumbered new 52-week lows on the NYSE and on the Nasdaq exchange.

Overnight, Abu Dhabi reassured investors and said it will not let state-owned Dubai World go under. On November 25, 2009 Dubai World, parent of Nakheel, said that it would have trouble meeting its debt obligations. This sent world markets tumbling as investors were concerned that other entities may default which will add to the $1.7 trillion of credit losses and asset write-downs posted since the financial crisis began in 2007. Last week, several credit agencies downgraded and cited their dismay regarding much of the developed world's credit ratings. The rating agencies are concerned that lackluster economic growth coupled with massive deficit spending will lead to future defaults.

Exxon Mobil gapped down and closed below its 200-day moving average (DMA) line, falling on monstrous volume after the company announced plans to buy XTO Energy. Exxon's sales and earnings have steadily plunged over the past four quarters as oil prices continue trading significantly below their record highs of over $140 a barrel. The XTO buyout was a way for the company to grow even as oil prices continue trading nearly -50% below their record highs. Elsewhere, Citigroup Inc. (C -6.33%) gapped down after striking a deal with regulators to repay $20 billion in bailout funds.

Looking at the recent action in the market, the Dow Jones Industrial Average and benchmark S&P 500 Index enjoyed their best close of the year as they continue flirting with important resistance levels (10,500 and 1,115 respectively.). The major averages continue acting well as they remain perched just below resistance (their respective 2009 highs) and above their respective 50-day moving average lines. Both these factors are considered healthy and bodes well for this 8-month (41-week) rally. It was also encouraging to see the Nasdaq Composite Index close above the 2,200 threshold which has served as resistance for the past few months. A slew of economic data is slated to be released this week and, as always, it will be very important to see how the market reacts to the news.

PICTURED: The benchmark S&P 500 Index closed at its highest level this year.

Charts courtesy www.stockcharts.com

PICTURED: The Retail Index ($RLX +0.94%) rallied to a new 2009 high close.

Ctrip.com International (CTRP +$1.08 or +1.47% to $74.62) posted a gain today on average volume. Near its pivot point now, it encountered some distributional pressure when recently rallying above its "max buy" price of $77.60. Featured on 12/01/09 in yellow in the mid-day report (read here). It triggered a technical buy signal as it rose with more than +50% above average volume from a brief consolidation resembling a "high-tight-flag" pattern which it formed after repairing a late-October breach of its 50 DMA line and sprinting considerably higher. Fundamentally, its sales revenues and earnings increases have shown acceleration in the 3 most recent quarterly comparisons and rose solidly above the +25% guideline in the latest period ended September 30, 2009.

A follow-up study on 12/29/08 included an annotated graph under the headline "Disciplined Investors Avoided This Trip To The House Of Pain."  That was well after if was dropped from the Featured Stocks list on 6/10/09 based on weak technical action when it closed at $49.84. Technically, it has rebounded very impressively from subsequent lows in the $16 area. It has maintained a strong and steady annual; earnings (A criteria) history.  Fundamentals have shown greater sales revenues and earnings increases in the most current quarterly comparisons (C criteria), which is a very encouraging sign.  The number of top-rated funds owning its shares increased from 52 in Mar '09 to 114 in Dec '09, which helps satisfy the I criteria.

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.