After a tough start to the week, stocks closed higher on Wednesday as earnings optimism and a slew of analyst upgrades helped offset the pessimism. Volume was reported slightly lower than the prior session's totals on the NYSE and on the Nasdaq exchange, which suggested large institutions were not aggressively buying stocks. Advancers led decliners by nearly a 3-to-1 ratio on the NYSE and by a 2-to-1 ratio 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, higher than the total of 12 issues that appeared on the prior session. New 52-week highs still solidly outnumbered new 52-week lows on the NYSE and on the Nasdaq exchange.

Stocks traded between positive and negative territory on Wednesday before the bulls showed up and sent stocks higher in the afternoon. Several of Wall Street's top bankers spent the morning testifying on Capital Hill about the 2007-2009 financial crisis. The bankers, whose companies collectively received more than $100 billion in government aid, spent hours explaining what happened during the crisis. The Financial Crisis Inquiry Commission was formed to examine and learn from what went wrong during that period.

In other news, Google Inc. (GOOG -0.57%) gapped down after the tech giant said it may exit China, the world’s largest Internet market, on censorship concerns. It rebounded to close at its 50-day moving average line after trading below that important short-term average for the first time since July 2009.  Meanwhile, shares of Baidu Inc. (BIDU +13.71%) gapped up in response to the news, and it came within 5 cents of hitting a fresh all-time high while rising straight up from the bottom of a "double bottom" type base pattern.

At 2:00PM EST, the Federal Reserve released its Beige Book which showed the economy continues to recover in many regions in the country. The Fed said, "while economic activity remains at a low level, conditions have improved modestly further, and those improvements are broader geographically than in the last report." The Beige Book collects information from 12 District Fed Banks and will be used at the January 26-27 FOMC meeting. 

Stocks slid on Monday and Tuesday, but the bulls showed up on Wednesday and quelled the bearish pressure. However, several leading stocks have sold off hard this week and negated their latest breakouts in many cases.  The volatility reiterates the importance of remaining selective and disciplined as investors attempt to figure out how earnings season will unfold. It is important to note that the current 45-week rally remains intact as long as the major averages continue trading above their respective 50-day moving average (DMA) lines. Remember, that until those levels are breached, the bulls deserve the benefit of the doubt.

Green Mountain Coffee Roasters (GMCR +$5.07 or +6.29% to $85.68) gapped up today and tallied a considerable gain with just +26% above average volume as it rallied to a new all-time high well above its "max buy" level. It is clear of resistance due to overhead supply, a factor making it more likely to sprint higher, unhindered by resistance.  Disciplined investors would avoid chasing it more than +5% above its latest pivot point.  Meanwhile, losses should always be kept small by strictly selling any time any stock falls more than -7% from your buy price. Prior chart highs in the $76-77 area are important support levels to watch now.  

GMCR has stayed well above prior chart highs while recently consolidating, and it has shown healthy action since its last appearance in this Featured Stock Update (FSU) section on 12/28/09 with an annotated graph under the headline "New High Close As Buying Demand Warms Up Again".  That evening's report illustrated its gain above the pivot point of a 10-week "double bottom" type base with +62% above average volume confirming a new technical buy signal. GMCR had made a new appearance on 12/28/09 in yellow in the mid-day report (read here), returning the previously featured favorite to the Featured Stocks page at CANSLIM.net. Weak action had led it to be dropped from the Featured Stocks list on 12/01/09, but the repair of its prior 50-day moving average (DMA) line violation had improve its outlook. Do not be confused by the 3-for-2 split that occurred in the interim, as GMCR has traded up as much as +204% since appearing with an annotated graph under the headline "It May Soon Be Time To Go Green" when featured in the January 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.