Before Wednesday's opening bell, ADP Employer Services said US employers only cut 20,000 jobs last month. This was the lowest reading in two years and bodes well for Friday's official payrolls report. Elsewhere, the Institute for Supply Management (ISM) said its service index enjoyed the fastest growth rate since October 2007 which bodes well for the economic recovery. The service index currently makes up over two thirds of the overall economy and a stronger reading is another healthy sign for the economy. In Europe, Greece announced plans to cut its budget by an additional 4.8 billion euros ($6.6 billion) after European Union leaders called for deeper reductions before considering aid.

Looking at the market, the latest rally attempt was confirmed when a "cautious follow-through day" was produced by the Nasdaq Composite Index's +1.6% on Monday, March 1st. 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. Until then, the bulls deserve the bullish benefit of the doubt as the major averages continue edging higher.

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 Nasdaq Composite Index closed in a very tight range over the past three days.

Defensive groups were among Wednesday's best gainers as the Gold & Silver Index ($XAU +1.38%), Oil Services Index ($OSX +1.34%), Integrated Oil Index ($XOI +0.36%), and Healthcare Index ($HMO +0.93%) posted modest gains  The tech sector had a mostly positive bias, led by the Networking Index ($NWX +1.48%) and the Biotechnology Index ($BTK +0.84%), both of which surged to new recovery highs.  The Internet Index ($IIX +0.26%) also posted a small gain, but the Semiconductor Index ($SOX -0.86%) was a clear laggard. Modest losses from the Broker/Dealer Index ($XBD -0.51%), Bank Index ($BKX -0.40%), and Retail Index ($RLX -0.10%) also created an offsetting drag on the major averages.

Charts courtesy www.stockcharts.com

PICTURED: The Networking Index ($NWX +1.48%) rallied to a new recovery high.

Cninsure Inc (CISG +$2.21 to $24.45) spiked higher with 8 times average volume today, trading within a penny of its 52-week high following its latest earnings report for the quarter ended Dec 31, 2009, rising from a 20-week double bottom base. It was featured in the mid-day report (read here) color coded yellow with pivot point cited based on its 11/18/09 high. This China-based insurance broker has shown strong earnings and sales growth above the +25% guideline but generally decelerating over the course of recent years. The lack of leadership in the Insurance-Brokers industry group also remains a concern with respect to the investment system's L criteria. 

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.