Stocks in the US closed higher after the latest round of economic data was released. Volume, an important indicator of institutional sponsorship, was lower than Monday's levels, revealing a lack of appetite for accumulating shares from very large and influential institutional investors. Advancers led decliners by nearly a 2-to-1 ratio on the NYSE and by a 3-to-2 ratio on the Nasdaq exchange. There were 52 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 total of 43 issues that appeared on the prior session. New 52-week highs solidly outnumbered new 52-week lows on the NYSE and on the Nasdaq exchange.

Before Tuesday's opening bell, the Commerce Department said third quarter GDP rose by +2.2% which was lower than prior estimates and led many to question the health of the ongoing recovery. The report showed that companies curbed spending and cut inventories due to lackluster demand. At 10:00AM EST, the National Association of Realtors said existing home sales jumped +7.4%  to a 6.54 million annual rate. The report was the highest in more than two years and led many to question whether or not the ailing housing market has finally bottomed.

Continuing the recent trend, stocks and the US dollar both advanced. However, other dollar denominated assets (i.e. many commodities) edged lower. Stocks are decoupled from the US dollar, but investors cannot be sure if this is the beginning of a new trend or if this is a brief anomaly which, after the New Year, will pass.

Bloomberg.com reported that the Street expects 2010 earnings to grow +24% which follows a -12% decline in 2009. The survey also showed that first quarter earnings are expected to grow +28% when compared to the same period in 2009. The Dow Jones Industrial Average and the benchmark S&P 500 Index both closed below their respective resistance levels on this shortened holiday week. Elsewhere, the tech-heavy Nasdaq Composite hit another fresh 2009 high as investors continue to flock to tech stocks for potential growth.

PICTURED: The Nasdaq Composite Index hit another 2009 high, yet volume waned behind its latest gain.

The Bank Index ($BKX +0.12%) edged higher, and the Broker/Dealer Index ($XBD +1.17%) and Retail Index ($RLX +0.43%) helped the major averages trade with a modestly positive bias on Tuesday.  The Biotechnology Index ($BTK +1.73%) led the tech sector while the Semiconductor Index ($SOX +0.59%) and Networking Index ($NWX +0.82%) posted modest gains, but the Internet Index ($IIX +0.04%) ended just above unchanged for the day.  Defensive areas had a quiet session as the Oil Services Index ($OSX -0.29%) and Integrated Oil Index ($XOI +0.52%) finished mixed and little changed, meanwhile the Gold & Silver Index ($XAU +0.31%) and Healthcare Index ($HMO +0.14%) posted small gains.

Charts courtesy www.stockcharts.com

PICTURED: The Biotechnology Index ($BTK +1.73%) is rallying back toward its 2009 highs after recently consolidating above its 50-day moving average (DMA) line.

Credit Acceptance Corp (CACC -$0.05 or -0.15% to $41.24) saw its winning streak into new all-time high territory end today with a small loss after 7 consecutive gains. Prior chart highs in the $35-37 area are an important support level to watch now, but weakness would raise more serious concerns if volume expands behind damaging losses that lead to it slumping back into its prior base. The Finance - Consumer/Commercial Loans firm has maintained a great track record of annual and quarterly sales revenues and earnings increases that satisfy the C and A criteria of the investment system.  It was previously noted while showing some resilience near its important short-term average line while enduring some recent distributional pressure.

Disciplined investors avoid chasing extended stocks that have risen more than +5% above their prior chart high or pivot point.  If they miss the ideal window of opportunity, patience may allow investors to accumulate shares on light volume pullbacks, or when another new base forms and a new buy signal is triggered. Investors can then "force feed" their winners by adding to already profitable positions whenever additional buys can be made within the proper parameters. According to the investment system rules, averaging down should never be done.  The high-ranked leader's 9/29/09 breakout gain was backed by more than 2 times average volume. Since first 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).

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.