The US dollar rallied which put pressure on dollar denominated assets; mainly, stocks and commodities. Two important economic reports were released on Monday: Industrial production and the Empire State manufacturing index. US industrial production unexpectedly grew +0.1% last month while manufacturing in the New York region rose for an 8th consecutive month.

On Tuesday, the Federal Reserve is slated to announce its latest decision on interest rates and give its opinion on the state of the US economy. Analysts believe that the Fed will hold rates steady and largely reiterate its comments from its last meeting about the state of the economy. Inflation in Asia jumped to a 16-month high last month which led many analysts to believe that the Chinese and Indian Central banks will begin raising rates in the near future to curb their economy and combat inflation.

Looking at the market, since the March 1, follow-through-day (FTD) the market and a batch of leading stocks steadily rallied. The fact that we have not seen any serious distribution days since the FTD bodes well for this nascent rally. It is also 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 benchmark S&P 500 Index is challenging its recovery highs while Nasdaq Composite and Small-Cap Indices have rallied on to new highs.

The Biotechnology Index ($BTK +0.93%), Healthcare Index ($HMO +0.24%), and Retail Index ($RLX +0.41%) posted modest gains while offsetting weakness in other groups kept the major averages from making headway.  Financial shares showed mixed action as the Broker/Dealer Index ($XBD -0.52%) ended with a small loss while the Bank Index ($BKX +0.20%) edged higher.  Commodity-linked areas traded with a slightly negative bias as the Oil Services Index ($OSX -1.16%), Integrated Oil Index ($XOI -0.68%), and Gold & Silver Index ($XAU -0.32%) suffered small losses. The Internet Index ($IIX +0.00%) and Networking Index ($NWX +0.03%) held their ground, meanwhile the Semiconductor Index ($SOX -1.39%) was a standout laggard in the tech sector.

Charts courtesy www.stockcharts.com

PICTURED: The Semiconductor Index ($SOX -1.39%) fell for a third consecutive loss, ending -5.52% off its recovery high.  Of the tech sector indexes routinely followed in this section it is the only one without a solid year-to-date (YTD) gain.  This suggests that chip-related companies as a group are lagging, while other industry groups within the tech sector have been showing better leadership (L criteria) and could offer investors more ideal buy candidates with better odds of working out favorably on the long side.

Pegasystems Inc. (PEGA +2.47 or +7.15% to $39.30) gapped up today and rallied to a new 52-week high. The considerable gain above its pivot point with more than 3 times average volume met the requirement for a technical buy signal.  The bullish action came after the high-ranked Computer Software - Financial firm announced plans to buy Chordiant Software Inc (CHRD), a firm with sub par fundamentals under the investment system guidelines. It is far more common for any company making an acquisition to pull back while the firm being acquired rises, however the market reacted positively to the news and lifted PEGA shares. Prior chart highs are now an initial support level to watch on subsequent pullbacks.

It recently found support near its 50-day moving average (DMA) line. Mostly healthy action has followed since its color code was changed to yellow 2/26/10 with a new pivot point cited and an annotated graph included under the headline "Consolidation Continues For Computer Software Firm."  It was featured in the January 2010 issue of CANSLIM.net News (read here). The company has attracted an increasing number of institutional investors, as the number of top-rated funds owning its shares rose from 43 in Sep '08 to 90 in Dec '09, which is a solid reassurance concerning the investment system's I criteria. It has shown good sales revenues increases and its earnings increases were well above the +25% guideline in the 5 last quarterly comparisons versus the year ago period.

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.