The major averages negatively reversed and violated Monday's lows, closing with losses on heavier volume than the prior session. The ominous action effectively ended the nascent rally attempt and suggested that large institutions are still aggressively selling stocks. Decliners led advancers by almost a  2-to-1 ratio on the NYSE and more than 2-to-1 on the Nasdaq exchange. There were only 6 high-ranked companies from the CANSLIM.net Leaders List that made a new 52-week high and appeared on the CANSLIM.net BreakOuts Page, lower than the 7 issues that appeared on the prior session. New 52-week highs still outnumbered new 52-week lows on the NYSE and on the Nasdaq exchange.

Shares of Apple Inc. (AAPL +1.41%) rose after the company said earnings surged+50%on record sales of Macintosh computers and iPhones. The company's huge numbers were due to an accounting change from the way iPhones are calculated. On Wednesday, the tech giant is slated to release its newest and much anticipated product- a tablet computer. Elsewhere, scores of other companies are slated to release their results this week. So far, approximately three-quarters of the companies that have reported their Q4 results have topped estimates for per-share earnings, but the markets tepid reaction remains a concern.

On the economic front, two important reports were released on Tuesday: the latest read on consumer confidence and the S&P Case/Shiller home price index. The Conference Board’s confidence index beat estimates and rose to 55.9 largely due to a stronger labor market. This helped offset concerns that China's efforts to cool their booming economy will adversely affect the global economy and a disappointing report fromt the ailing housing market. The S&P/Case-Shiller home price index rose for a sixth straight month in 20 major US cities. The index rose +0.2% on a seasonally adjusted basis, but was down -5.3% from November 2008.

Looking at the market, Tuesday's ominous action effectively ended the brief rally attempt and suggests a steeper correction may unfold. It is also important to see how the major averages react to their respective 50-day moving average (DMA) lines. Until they all close above that important level the technical damage remaining on the charts is a concern. So far, the market's reaction has been tepid at best to the latest round of economic and earnings data. Remember that the recent series of distribution days coupled with the deleterious action in the major averages suggests large institutions are aggressively selling stocks. Disciplined investors will now wait for a new follow-through day to be produced before resuming any buying efforts. Until then, patience is paramount.

PICTURED: The benchmark S&P 500 Index negatively reversed and traded below Monday's lows, effectively ending the latest rally attempt.

Charts courtesy www.stockcharts.com

PICTURED: The Bank Index ($BKX -2.20%) is still trading above its 50-day moving average (DMA) line, however its latest rally attempt fizzled just short of prior chart highs.  Upward progress above the prior resistance level would be an encouraging sign to watch for in the near-term, meanwhile, any slump back under its 50 DMA line would raise concerns while also hurting the outlook for the broader market.

Longtop Financl Tech Ads (LFT -$1.59 or -4.33% to $35.13) suffered another loss on above average volume today, ending at its lowest close since November while promptly slumping back below its 50-day moving average (DMA) line. The company is due to report earnings on Wednesday, February 10 after the market close. Widespread weakness in China-based issues has clearly been a factor in recent days.  Its outlook becomes increasingly questionable the longer it remains trading below its 50 DMA line. Meanwhile, prior resistance in the $33 area defines the next an important support level to watch.

News of a proposed offering of additional shares on 11/16/09 seemed well received by the market. Its fundamentals remain strong. The number of top-rated funds owning an interest in its shares rose from 20 funds in Dec '08 to 61 funds in Dec '09, which is reassuring concerning the I criteria.  It has reported strong annual and quarterly earnings increases (good concerning the C & A criteria) backed by strong sales revenues increases. Return on Equity of +20% is above the +17% guideline. Upward progress can often be hindered by additional share offerings for the near-term, yet institutional investors typically increase their interest through the process.   LFT was first featured at $22.19 on Thursday, April 02, 2009 in the CANSLIM.net Mid Day Breakouts 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.