The market averages closed the session mixed on Friday as the fourth consecutive weekly declines were tallied for the S&P 500 Index and the Dow Jones Industrial Average. Volume totals were lighter in comparison to the prior session totals on the NYSE and on the Nasdaq exchange, revealing a lack of any conviction from the institutional crowd.  Decliners and advancers were evenly mixed overall, with a slightly positive bias on the Nasdaq exchange. There were 3 high-ranked companies from the CANSLIM.net Leaders List that made a new 52-week high and appeared on the CANSLIM.net BreakOuts Page, down from the 6 issues that appeared on the prior session.

On Monday, the market opened sharply lower but spent the rest of the day rallying after the Institute of Supply Management (ISM) released a stronger than expected service index. The service index, also is also known as the non- manufacturing index and makes up nearly 90% of the economy, rose to 47 from 44 in May. Even though the reading was stronger than expected it was still below the boom/bust line of 50, indicating contraction. US services shrank at the slowest pace in nine months which was also an impressive feat. Looking forward, investors will begin digesting second quarter earnings and that will likely dictate the near term action for the major averages.

On Tuesday, the major averages and several commodities fell as the US dollar rallied. Investors sold stocks and commodities and moved to the greenback as concern spread that second quarter earnings will not be strong enough to justify the robust rally (nearly +50% rally in the Nasdaq Composite) seen in the major averages since their March lows. On Wednesday, the market treaded water for most of the day as investors digested the latest economic report from the International Monetary Fund (IMF). The IMF released a report that said the global economic outlook for the latter half of 2009 will be lackluster at best. The IMF believes that the global economy will not begin to recover until 2010, which is past the Street's consensus. Earnings season officially started this week and will likely play a major role in the near term action for the major averages. Remember that the primary argument that propelled stocks higher from the March lows was the notion that the economy was turning around and that a strong rebound would occur in the latter half of 2009. Since that notion has been questioned in recent weeks, it will be very interesting to see what catalyst the bulls can use to send stocks higher in the latter half of the year. 

Stocks closed modestly higher on Thursday as oil prices continued their free fall. Crude oil fell over for a 7th straight day on the New York Mercantile Exchange. A little over a week ago, crude prices stood at $73 a barrel, and falling oil prices have actually pressured markets around the world in recent days since the US dollar has rallied in tandem. On Friday, stocks slid after the consumer confidence fell. The Reuters/University of Michigan preliminary index of consumer confidence slid by a larger than expected amount to 64.6, down from 70.8 in the prior month. The Commerce Department released a separate report which showed that the trade deficit unexpectedly shrank in May to the lowest level in almost a decade.

Charts courtesy www.stockcharts.com

PICTURED: The Internet Index ($IIX +0.49%) rallied impressively from its March lows, but it has recently slumped below its 50-day moving average line.  That is a worrisome sign that the group's strength is deteriorating.  Technically, a violation of recent chart lows for the $IIX would hurt the near-term outlook for most Internet-related issues. 

Synaptics Inc. (SYNA -$0.12 or -0.35% to $34.10) fell of Friday for its 7th consecutive loss. During that streak, a 50-day moving average (DMA) line and upward trendline violation on 7/08/09 triggered technical sell signals.  Prior chart highs define an important support level it is consolidating above now. Any deterioration leading to a close under its May 1st close of $33.33 would raise more serious concerns and fully negate its latest breakout by erasing all bullish action since May. For its outlook to improve, technically, it needs to repair the recent violation of its short-term average and show signs of institutional support. It was first featured in yellow in the May 18, 2009 Mid-Day BreakOuts Report (read here). The number of top-rated funds owning its shares rose from 123 in June '08 to 199 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.

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.