The major averages ended lower after the Treasury's 10-year note auction and the Fed's Beige Book data was released. Decliners led advancers by an 8-to-7 ratio on the NYSE while they led by more than a 3-to-2 ratio on the Nasdaq exchange. Volume was reported higher than the prior session on the NYSE and Nasdaq exchange, which marked a distribution day, however the relatively minor losses for the major indices softened its severity. Interestingly, there were 19 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 11 issues that appeared on the prior session.  The greater expansion in the new highs list, especially on a down day for the broader market, offered more encouraging news for growth oriented investors.

Before Wednesday's opening bell Home Depot (HD +0.16%) raised guidance for the rest of the year which sent futures prices nicely higher. However, the buying enthusiasm quickly waned and shortly after the opening bell the market slid into negative territory. The 10-year Treasury yield jumped over +4%, which was the highest rate this year. On Wednesday, the government sold $19 billion to large fund managers, sovereign wealth funds, foreign central banks, and other buyers. This was the second of three auctions this week that will raise $65 billion as the government tries to finance its record spending.

Shortly after 2pm EST the Federal Reserve released its Beige Book which showed that the economic slump may be declining in nearly half its regions. The report also showed that the outlook at some companies continue to improve while “stringent” loan conditions and a “weak” labor market continue to curb economic growth. The Fed said, “Economic conditions remained weak or deteriorated further” from mid-April through May. In 5 of the 12 Fed districts it was “noted that the downward trend is showing signs of moderating.” The report reaffirms comments that the rate of economic deterioration is slowing from Fed Chairman Ben S. Bernanke’s congressional testimony last week.

A late-day rally helped the major averages erase earlier losses and finish well up from the session's lows. It was also encouraging see the bulls show up and defend support for the major averages. Since Monday June 1, 2009, the major averages have traded in a very narrow trading range as they continue building base-on-base type patterns. Looking forward, the bulls remain in control as long as support holds.

PICTURED: The Dow Jones Industriual Average continues building its base-on-base pattern.

Charts courtesy www.stockcharts.com

PICTURED: The Retail Index ($RLX -0.92%) is consolidating above its 50-day and 200-day moving average (DMA) lines.  Subsequent gains above recent chart highs could signal better health among retail-related issues.

Neutral Tandem Inc (TNDM -$2.41 or -7.99% to $27.86) suffered another considerable loss on above average volume and closed near its session low today, finishing just above its 50-day moving average (DMA) line. This week's second dose of heavy distribution has completely negated its latest technical breakout as the stock closed below its prior high close ($29.64 on 5/01/09). Its color code was changed to green based on the worrisome technical deterioration into its prior base. Meanwhile, any subsequent loss leading to a close below its 50 DMA line would raise more serious concerns and trigger a technical sell signal. Wild whipsaw action intra-day on 6/08/09 likely triggered many open "sell stop" orders.  It impressive "positive reversal" on 5/14/09 was noted as a sign of prompt institutional support arriving. It had gapped up on 4/30/09 for a new all-time high after reporting solid quarterly sales and earnings increases.

TNDM traded up as much as +72.42% since first featured at $18.89 in the 3/02/09 Mid-Day BreakOuts Report (read here). Its latest pivot point of $29.85 was based upon the stock's May 1st high.  For investors who miss a proper buy point whenever any high-ranked stock breaks out from a first stage base, a stock's first pullback to its 50 DMA line (or its 10-week average when viewing a weekly chart) may offer an ideal secondary buy point. Odds of success taper off upon each subsequent test of support at that important short-term average line.  Disciplined investors know that a sound base needs to form before new buying efforts might be justified under the investment system's guidelines.   As always, investors should sell to limit losses if ever any stock falls more than -7% from their buy price. 

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.