The Dow Jones Industrial Average and the benchmark S&P 500 Index ended lower for a third consecutive day while the Nasdaq Composite Index snapped its losing streak and ended with modest gains on the session. Sentiment turned sour after FedEx Corp (FDX -1.40%) reported lackluster sales data, increasing concerns that the economic rebound will slow. Volume totals were reported higher on both major US exchanges. Decliners led advancers by almost a 3-to-2 ratio on the NYSE, yet advancers narrowly led decliners on the Nasdaq exchange. There were 5 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 3 issues that appeared on the prior session.  A further expansion in the new highs list would offer encouraging news for growth oriented investors. 

Before Wednesday's opening bell, FedEx released a disappointing earnings forecast and said the economy is "extremely difficult." The delivery giant said revenues were down while earnings were up. The primary concern here is that this is not sustainable, as the main way to increase earnings on lower revenues is to slash your workforce. That could work for one or two quarters, but beyond that it is simply an unsustainable means of boosting earnings. The company did not provide a full-year outlook which also hurt the stock.

Elsewhere, the rating giant, Standard & Poor's downgraded the credit ratings of 18 banks as Congress prepared legislation to address the financial industry. Several of the country's largest banks began repaying TARP funds, yet this was a foregone conclusion and investors largely yawned at the news. In other economic news, the Labor Department released the consumer prices index (CPI) which showed that the cost of living in the US rose at a slower-than-expected pace in May. This helped allay inflation concerns and was the largest 12-month drop in prices in almost 60 years! The consumer price index rose +0.1% after no change a month earlier. From May 2008- May 2009, the consumer price index fell -1.3% which was the largest decline since 1950. Remember that prices last year were way out of whack with historical norms, so a pullback of some sort is not necessarily a bad thing. At this point, how many people do you know who are really upset at paying lower bills each month?

PICTURED: The Nasdaq Composite index ended higher after successfully testing support, boosted by the tech sector's gains.

There was little net change for the Networking ($NWX -0.13%) and Internet ($IIX +0.07%) indexes, yet the tech sector saw decent gains from the Semiconductor ($SOX +0.93%) and Biotechnology ($BTK +1.23%) indexes. That tech strength helped the Nasdaq Composite Index post a small gain and outpace its peers which ended in the red.  Gains for the Retail Index ($RLX +1.03%) and the Healthcare ($HMO +1.24%) group worked to help offset losses elsewhere.Weakness on Wednesday was mostly confined to the financial and commodity-linked groups as the Bank ($BKX -3.29%) and Broker/Dealer ($XBD -1.90%) indexes fell along with the Oil Services ($OSX -2.79%) and Integrated Oil ($XOI -1.76%) indexes. The Gold & Silver Index ($XAU -0.56%) suffered a smaller gain.

Charts courtesy www.stockcharts.com 
 

PICTURED: The Semiconductor Index ($SOX +0.93%) posted a gain, halting a 4 session losing streak just above its 50-day moving average (DMA) line.

Shanda Interactive Ent Ltd (SNDA $+0.12 or +0.22% to $53.70) posted a tiny gain today on light volume. That followed 3 straight losses with above average volume, yet ended a 5-day losing streak near its latest pivot point. It is now testing prior chart highs and its 50-day moving average line which are very important support levels to watch. Violations could trigger worrisome technical sell signals, especially if volume spikes higher behind subsequent losses. 

Just after featured in the June 2009 issue of CANSLIM.net News, it quickly got too extended from a proper buy point. In the stock's latest Featured Stock Update section appearance on June 3rd it was noted that, "Patient investors may watch for a pullback near its 50-day moving average (DMA) line, an important support level which has not been tested since breaking out above resistance at $34.00 back in March." Its color code has been changed to yellow now, however the recently noted distributional pressure (6/12 and 6/15) in this stock does not bode well, and distributional pressure recently evident in the broader market averages (the M criteria) has not been an encouraging sign.  Investors who may be considering SNDA trades now should be sure to review the additional analysis that was included in the "What to Look Out For" section of the June 2009 issue of CANSLIM.net News - read here).

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.