The market raced higher on Monday, with bullish action sending each of the major averages above near term resistance. Advancers trumped decliners by over a 4-to-1 ratio on the NYSE and by over a 3-to-1 ratio on the Nasdaq exchange. There were 28 high-ranked companies from the CANSLIM.net Leaders List that made a new 52-week high and appeared on the CANSLIM.net BreakOuts Page, higher than the 14 issues that appeared on the prior session.  The greater expansion in the new highs list was encouraging news for growth oriented investors.  Volume was reported higher than the prior session on the Nasdaq exchange, which was an encouraging sign of institutional accumulation.  The NYSE volume total reports from other sources also suggested an increase in trading over Friday's totals, conflicting with the data shown in this market Commentary section's top table.  More on this subject of NYSE volume is mentioned in the Editor's Letter in the June 2009 issue of CANSLIM.net News which was published on Sunday (read here).

The market opened higher after General Motors (GM delisted) filed for Chapter 11 bankruptcy protection. The auto giant confirmed all previous rumors that it would file for bankruptcy. The US government announced plans to invest (not loan) an additional $30 billion for a +60% stake in the new company. President Obama made it very clear when he said his administration has no interest in running the day to day operations of the new company. However, he acknowledged that this was their best option. The market rallied on the news that shares of GM and Citigroup (C -0.81%) will be removed from the Dow Jones Industrial Average. Cisco (CSCO +5.41%) and Travelers (TRV +3.07%) will replace the two icons.

The news on the economic front was positive which helped send the major averages above stubborn resistance levels. Personal spending for April declined -0.1%, which was topped the average forecast and was an improvement from March. Meanwhile, personal income for April showed a surprise +0.5% in the face of higher unemployment. Construction spending for April was also stronger than expected and rose by +0.8% month-over-month. The ISM Manufacturing Index for May was +42.8, which largely matched expectations however it was stronger than the prior month's reading. The reading indicated that manufacturing activity continues to contract but the rate of contraction is falling.  Monday's data was the latest in a series of stronger than expected economic data which suggests the worst of the recession is behind us and has played a major role in the market's strong rally from the March low.

After a brief consolidation the market resolved itself to the upside on Monday, which was a very welcome and healthy sign. Remember it is very important to objectively analyze the tape and let the market guide you. Trying to fight it is a futile activity that does little more than boost your ego and hurt your portfolio. The market continued to push higher, and the major averages managed to breakout and close above important near-term resistance points. Looking forward, the market will remain healthy as long as those resistance points act as support during consolidations.  As long as the major averages continue trading above support (formerly resistance) the bulls remain in control. However, if at any point those levels are breached, the deterioration would start to suggest that the bulls are losing their edge.

PICTURED: The S&P 500 Index closed above 930, a former resistance level, and rose above its 200-day moving average (DMA) line on Monday!  This was the first time the benchmark index closed above its 200 DMA line since December 2007!  The Dow Jones Industrial Average is the only one of the 3 major indices still under its 200 DMA line, yet it appears on the brink of crossing above that important long-term average.

Charts courtesy www.stockcharts.com 
 

PICTURED: The Retail Index ($RLX +6.13%) set a strong pace on Monday as it posted a large gain and rallied up from its 50-day moving average line.

Synaptics Inc. (SYNA +$1.50 or +4.27% to $36.62) gapped up today and posted a gain with just better than the minimum +50% above average volume guideline.  This confirmed its recent bullish breakout above its pivot point, and it closed just above its "max buy" level, so no resistance remains from overhead supply. It was first featured in yellow in the May 18, 2009 mid-day report (read here). The number of top-rated funds owning its shares rose from 123 in June '08 to 184 in March '09, which is good news concerning the I criteria. Strong earnings and sales revenues growth in the 4 latest quarterly comparisons satisfies the C criteria. Its annual earnings (the A criteria) history showed a downturn in 2006, leaving concerns, but it followed that up with strong growth the next 2 years stock was first featured on Monday, May 18, 2009 in the CANSLIM.net Mid Day Breakouts Report (read here).

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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.