Stocks rallied, with emerging-market equities recovering from the worst three-day slide in a year as the US dollar fell, consolidating after recent gains. Volume was higher than the prior session on the NYSE and the Nasdaq exchange. Advancers led decliners by more than a 3-to-1 ratio on the NYSE and nearly a a 3-to-1 ratio on the Nasdaq exchange. There were 9 high-ranked companies from the CANSLIM.net Leaders List that made a new 52-week high and appeared on the CANSLIM.net BreakOuts Page, up from the 5 issues that appeared on the prior session. New 52-week highs outnumbered new 52-week lows on the NYSE and on the Nasdaq exchange.

Risk-taking returned to the market and a weaker US dollar sent metal and oil prices higher.  Overnight, the euro rallied on speculation that Greece will receive European aid to tackle its massive budget deficit. On February 11, EU leaders are scheduled to discuss Greece’s plans to reduce its massive budget deficit and many now believe that the EU will offer assistance. European Central Bank President, Jean-Claude Trichet, unexpectedly left a meeting in Sydney one day ahead of schedule and returned to Europe to discuss this issue. In related news, European Commission President Jose Barroso supported the euro when he directly said that investors would be wrong to bet against it.

Looking at the market, Tuesday marked Day 3 of the newest rally attempt which means that as long as last Friday's lows are not breached this rally attempt remains intact.  In addition, the earliest a possible follow-through day (FTD) could emerge will be Wednesday if the major averages rally at least +1.7% on higher volume than the prior session. However, if last Friday's lows are breached then the day count will be reset and 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 which were support and are now acting as resistance. 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.

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PICTURED: The Dow Jones Industrial Average rose back above 10,000 and Caterpillar (CAT +5.4%) was the best performing Dow component after receiving an analyst upgrade.

Charts courtesy www.stockcharts.com

PICTURED: The Broker/Dealer Index ($XBD +0.54%) has been recently testing support at its 200-day moving average (DMA) line and prior chart lows.  Gains back above its 50 DMA line (the blue line on the above graph) are needed to help this group's outlook.  Such gains would also improve the broader market outlook.

Credit Acceptance Corp (CACC -$0.90 or -2.15% to $40.90) has fallen sharply in the course of its current 7-session losing streak. Investors were prompted to consider locking in profits as worrisome action has transpired since its last FSU section appearance on 1/28/10 under the headline "Strong Leader Extended After Producing Big Gains." Damaging losses have quickly erased a large portion gains of as much as +61.2% since it was first featured in yellow at $33.48 in the 9/29/09 mid-day report (read here). After it was initially featured, it went on to later build a new sound base on top of its prior base. New pivot point and max buy levels were noted on 11/19/09, yet it stubbornly held its ground in a tight range for another month plus before finally blasting to new all-time highs with heavy volume on 12/16/09. 

Distributional action recently has raised concerns and triggered technical sell signals as it violated its 50-day moving average (DMA) line. Previous chart highs at $37 define the next important support level to watch. Right now, however, the M criteria is an overriding concern which discourages new buying efforts until a proper follow-through day emerges. This stock also needs time to build a new sound base before new buying efforts would be justifiable under the investment system's strict technical buying discipline. On Monday Jan 25th the company announced the pricing of $250 Million Senior Secured Notes. 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. 

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.