The paper categorized Monday's gain as a "cautious follow-through day" which confirmed the latest rally attempt. Stocks continued to edge higher on Tuesday amid news India's economy grew nicely last year and as speculation spread that the European Union will bail out Greece. Volume, a critical gauge of institutional demand, was reported higher than the prior session on the Nasdaq exchange and on the NYSE. Advancers led decliners by a more than a 2-to-1 ratio on the NYSE and by nearly a 2-to-1 ratio on the Nasdaq exchange. New 52-week highs overwhelmingly trumped new lows on both exchanges which was another welcome sign while there were 76 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 69 issues that appeared on the prior session.

India, one of the world's strongest emerging markets, said its economy rose nicely last quarter thanks in part to strong increases in manufacturing and exports. India, China and several other Asian economies have played a massive role in helping the global economy recover from one of the worst recessions since WWII. The healthy economic data from India helped support the notion that the global recovery would continue in 2010. Most of the US indexes erased their losses for the year and are now in positive territory. The recent batch of healthy economic and earnings data helped the S&P 500 recovery from a -9% slump. So far, over +460 companies in the benchmark index have reported quarterly earnings and approximately +75% have topped analysts' estimates. Barring some unforeseen event, the S&P 500 Index is on track to snap a record 9-quarter earnings slump.

Looking at the market, Monday, Day 16 of the latest rally attempt, confirmed the latest rally attempt when a "cautious follow-through day" was produced by the Nasdaq Composite Index. Weighing into the decision to label the day a follow-through-day (FTD) was the strong action in leading stocks along with a great expansion noted in the new highs list.  That action suggests that there is a healthy crop of strong stocks capable of fueling a substantial rally higher for the major averages.  We will be looking out for any near-term distribution days (high volume declines) which would hurt the chances for this nascent rally.

It is a welcome sign to see the market continue to improve as investors digest the latest round of stronger than expected economic and earnings data. Remember that now that a new rally has been confirmed, the window is open to start buying high quality breakouts. Trade accordingly.

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PICTURED: The S&P 600 Small Cap Index rallied to a fresh recovery high on Tuesday. Such strength in the small cap index represents encouraging news for all fans of the fact-based system that focuses mostly on smaller growth stocks!

Charts courtesy www.stockcharts.com

PICTURED: The Gold & Silver Index ($XAU +2.35%) rallied above its 50-day moving average (DMA) line and February highs with a 4th consecutive gain.

Credit Acceptance Corp (CACC +$2.13 or +5.02% to $44.54) rallied for a considerable gain today and closed just pennies above its 50-day moving average (DMA) line. The recent gains have helped its outlook improve, yet it still needs more time to build a new sound base before new buying efforts would be justifiable under the investment system's strict technical buying discipline. Its small supply (S criteria) of only 5.89 million shares in the public float could contribute to greater volatility in the event of any new institutional posturing. On Monday Jan 25th the company announced the pricing of $250 Million Senior Secured Notes, and it only rallied a little higher afterward before investors were prompted to consider locking in profits as worrisome distributional action transpired. The 50 DMA could act as a resistance level, whereas in the past it served as support.  Continued progress above that short-term average is critical to its chances of eventually producing a new sound base and buy point.  Its last FSU section appearance on 2/09/10 included an annotated graph under the headline "Damaging Losses Prompted Profit Taking".

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 produced 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.  

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.