The market averages posted solid gains on Monday with much higher volume totals in comparison to the prior session totals on the NYSE and on the Nasdaq exchange, revealing better buying conviction from the institutional crowd.  Advancers led decliners by about 5-to-1 on the NYSE and nearly 3-to-1 on the Nasdaq exchange. There were 6 high-ranked companies from the CANSLIM.net Leaders List that made a new 52-week high and appeared on the CANSLIM.net BreakOuts Page, up from the 3 issues that appeared on the prior session.

The financial sector has helped to lead as the major averages have risen from their March lows.  The Industry Group Watch section shows the important resistance that the bank index is facing in the near term.  Financial shares, as long-time readers of this commentary know, are an important leading indicator to watch.  After leading a substantial rebound from the major averages, the financial group has been consolidating along with the broader market in recent weeks.  Further upward progress in the financial group could bode well for the overall market outlook, however, the near-term resistance is substantial.  Of course, leadership in a fair number of industry groups is necessary for any sustained rally, but the financial group played a critical role in the market's downswing, and it will play a very important role as the major averages rebuild.

Charts courtesy www.stockcharts.com

PICTURED: The Bank Index ($BKX +6.53%) was a standout gainer on Monday, underpinning the major averages' solid advance.  In the near term it faces several important technical hurdles including its 50-day moving average (DMA) line first, then a multi-month downward trendline,and then its 200 DMA line. Among the catalysts for the big gain was a prominent analyst's upgrade of Goldman Sachs (GS +5.34%) ahead of its latest quarterly earnings announcement.

HMS Holdings Corp (HMSY +$0.99 or +2.52% to $40.28) posted another gain on below average volume. It positively reversed on Friday after a pullback near prior highs in the $38 area which are a very important initial support level above its 50-day moving average (DMA) line. Last week it was noted as it briefly violated an upward trendline connecting its April-June lows (not shown), raising some concerns.  Deterioration into its prior base, or a violation of its 50 DMA line, would raise more serious concerns and trigger technical sell signals. A gap up gain on 6/16/09 with heavy volume triggered a technical buy signal. No overhead supply is left to hinder the progress for this Commercial Services - Healthcare firm.  During its latest base its daily volume totals dried up, yet the volume behind its breakout to new highs (the N criteria) day was nearly two and a half times its average volume total.  The heavy volume and gap up also provided a nice reassurance of institutional (the I criteria) buying demand.

A downturn in 2006 earnings (see red circle) is a fundamental flaw in HMS Holdings Corp's annual earnings history that raises some concerns with respect to the A criteria of the investment system.  Investors' odds are usually better with a company that has a steady 3-5 year earnings growth history.  That shortcoming could give investors one extra reason to be very careful about limiting losses.  The stock was first featured on Friday, February 20, 2009 in the CANSLIM.net Mid Day Breakouts Report (read here), then dropped from the Featured Stocks list on 4/02/09 due to weak action, returning yet again in yellow in the mid-day report on 5/01/09.

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.