After a 7-week decline, the euro managed to positively reverse on higher volume than the prior session. If this nascent rally continues, it will bode well for dollar denominated assets- mainly stocks and commodities. The primary concern which sent the dollar soaring (euro plunging) in recent weeks was: the risk of default from Greece, Spain and Portugal. Fear spread after Moody’s Investors Service (MCO -0.59%) said it may downgrade Greek debt.

Looking at the market, Thursday marked Day 14 of a new rally attempt which means that as long as the February 5th lows are not breached the window remains open for a new follow-through day (FTD) to emerge. A new follow-through day will confirm the current rally attempt and will be produced when one of the major averages rallies at least +1.7% on higher volume than the prior session as a new batch of leaders break out of fresh bases. However, if the February 5, 2010 lows are breached then the day count will be reset and a steeper correction may unfold. So far, the market’s reaction has been tepid at best to the latest round of economic and earnings data which remains a concern. Remember that the market remains in a correction until a new new follow-through day emerges. Until then, patience is paramount.

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PICTURED: The S&P 500 Index rebounded from intra-day lows to close with a small loss.

Charts courtesy www.stockcharts.com

PICTURED: The Gold & Silver Index ($XAU +2.95%) posted a considerable gain and closed right at its 200-day moving average (DMA) line. Not long ago its 50 DMA acted as a resistance level, and now that short-term average appears to be falling toward its longer-term average line. Following the bullish crossover in April 2009 the XAU went on to produce great gains.  A subsequent bearish crossover could be an ominous sign for fans of gold-related stocks.

Rovi Corp (ROVI -$0.15 or -0.44% to $33.82) is consolidating after gains earlier this week helped it challenge its 52-week high. Today it was featured in yellow with pivot point based upon its 10/09/09 high noted in the mid-day report (read here). Recent gains helped it rally to new 2010 highs, however its subsequent ability to rally to a new 52-week high with at least +50% above average volume behind the gain could signal the beginning of a more substantial advance. Earnings per share increases in 3 of the past 4 quarterly comparisons versus the year ago period showed better than +25% growth.

Meanwhile, as the major averages (M criteria) have yet to produce a follow-through-day to confirm the latest rally attempt, it could spend more time consolidating on the right side of its near 4-month base.  Disciplined investors would be patient and not force action without the critical reassurances of heavy institutional buying demand in the market and for this specific firm's shares.

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.