The major averages shrugged off negative retail sales data and ended higher and commodity prices rebounded sharply from yesterday's sell off.  Advancers trumped decliners by a 3-to-1 ratio on the NYSE and by over a 2-to-1 ratio on the Nasdaq exchange. It was encouraging to see volume expand compared to the prior session on both major exchanges as the market rallied. Ideally, one would like to see volume expand when the market rallies and contract when it pulls back and this is exactly what has happened in recent sessions. There were 11 high-ranked companies from the CANSLIM.net Leaders List that made a new 52-week high and appeared on the CANSLIM.net BreakOuts Page, matching the 11 issues that appeared on the prior session.  The greater expansion recently occurring in the new highs list has offered encouraging news for growth oriented investors.

The major averages ended higher as investors digested tepid retail sales data from several of the country's largest retailers. Wal Mart (WMT -0.02%), the country's largest retailer, announced they will no longer be announcing monthly sales data. In other economic news, the Labor Department said initial jobless claims slid by 4,000 to 621,000 in the week ended May 30. This was in line with forecasts from a revised 625,000 the prior week. The report also showed that the total number of people collecting unemployment insurance fell for the first time in nearly five months which broke the streak of 17 consecutive records. Before Friday's opening bell, the Labor Department will release May's non farm payrolls report. The report will likely show over half a million jobs were cut last month sending the unemployment rate up over +9%! While it is important to study the data, it is even more important to see how the market reacts to that data.

PICTURED: The Nasdaq Composite Index's action continues to be strong. It hit another new high for 2009, and it is also healthy to see its 50-day moving average (DMA) line converging with its 200 DMA line. A bullish crossover would be yet another technical sign of improving strength - a healthier market environment (better M criteria).

The financial sector helped underpin the major averages on Thursday as the Broker/Dealer ($XBD +4.32%) and Bank ($BKX +4.81%) indexes were among the leading gainers. Commodity linked areas also advanced as the Gold & Silver ($XAU +3.22%), Oil Services ($OSX +3.25%), and Integrated Oil ($XOI +1.84%) indexes posted solid gains. The Semiconductor ($SOX +2.15%), Networking ($NWX +2.08%), and Internet ($IIX +1.36%) indexes also traded with a positive bias. Recent strength in the biotech index was illustrated in Wednesday's Industry Group Watch section (read here), and today, while posting a 6th consecutive gain, the Biotechnology Index ($BTK +0.09%) lagged the other tech indices. Elsewhere, the Healthcare Index ($HMO -0.17%) inched lower, and the Retail Index ($RLX -1.15%) was a standout laggard.

Charts courtesy www.stockcharts.com
 

PICTURED: The Semiconductor ($SOX +2.15%) is consolidating after Monday's sprint to new 2009 highs. Its 50-day moving average (DMA) line recently crossed above its 200 DMA line, which is a sign of near-term strength that generally bodes well.

Longtop Financl Tech Ads (LFT +$0.12 or +0.44% to $27.12) has been holding its ground since it gapped up on 5/28/09 after reporting another strong quarter. It needs more time to form another sound base, and its progress could be hindered by future share offerings.  The stock's prompt repair of its recent 50-day moving average (DMA) line violation, and its gap up are both indicative of solid institutional (the I criteria) support and buying demand. It found support on its first test of its 50 DMA line, then sprinted to new highs with gains backed by heavier volume, but it was soon hit with a wave of distributional pressure and technically violated its 50 DMA line, triggering a technical sell signal.  That prompted its last appearance in this Featured Stock Update section on 5/21/09 under the headline "Technical Violation of 50-Day Average Raises Concerns".  

As previously noted, this Chinese Computer Software firm might be hindered by future share offerings. On 4/27/09 it filed a registration of approximately 16 million shares for resale, and revealed a planned acquisition of another Chinese service provider. Often, light volume consolidations under the "max buy" level after a powerful breakout can offer patient investors opportunities to accumulate a high-ranked leader's shares within the guidelines of the investment system.  But in this case, heavy distribution and a potentially diluting stock offering are two very good reasons to be cautious for the near term.  If it forms a new orderly base in the weeks ahead, then another ideal entry point may present itself."

LFT was first featured at $22.19 on Thursday, April 02, 2009 in the CANSLIM.net Mid Day Breakouts Report (read here). Return on Equity of +24% is above the +17% guideline. It has reported strong annual and quarterly earnings increases (good concerning the C & A criteria) backed by strong sales revenues increases.

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.