This was a very interesting week on Wall Street as the market fell into a correction on Monday, then confirmed a new rally on Friday! Volume was higher than Thursday's levels on both exchanges, which was enough to help the major averages produce a follow-through day. Advancers led decliners by over a 4-to-1 ratio on the NYSE and by nearly a 3-to-1 ratio on the Nasdaq exchange. There were 24 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 14 issues that appeared on the prior session. New 52-week highs outnumbered new 52-week lows on both exchanges while new lows were in the single digits again.

On Monday, stocks tanked around the world, led by Asia, after disconcerting economic data from the Far East suggested the economic recovery may be in jeopardy. Leading growth stocks in the US took a pounding which led us to believe that the current rally was under pressure. However, the paper took it one step further and said that the market slid back into a correction. However, the bulls showed up on Tuesday and spent the rest of the week quelling the bearish pressure. On Tuesday, stocks bounced back on below average volume and helped the S&P 500 Index mark Day 1 of a new rally attempt.

The major averages ended higher on Wednesday as the US dollar tumbled. This marked Day 2 of the current rally attempt as the S&P 500 did not undercut Tuesday's lows (even though the other averages briefly did). CANSLIM.net's Market Commentary has noted multiple times in the past about how important it is in today's modern age to keep an eye on other markets since they are so interdependent. Energy shares were among the day's strongest advancers since crude oil managed to recover much that it lost earlier in the week. China's stock market fell another -5% which extended its decline from its 2009 high to over -20% which is the classic definition of a bear market. Normally, bear markets occur whenever a market or individual stock fall -20% from its most recent high. It is also important to note that China was one of the first of the globe's stock markets to recover from last year's brutal sell off.  The fact it is back in "bear market" territory suggests that it may also lead the way lower again. So far, the U.S. and Chinese governments have pledged more than $13 trillion (the entire size of the US economy) to combat the worst financial crisis since the Great Depression. This massive influx of government aid played a pivotal role in fueling the major rally we have seen in stock markets around the globe. However, it was encouraging to see the bulls show up and defend the bearish pressure for the second straight day in the US.

Stocks edged higher on Thursday (Day 3) after Chinese stocks soared and American International Group Inc. (AIG +1.70%) said it plans to repay the government. Elsewhere, Treasury Secretary Timothy Geithner said he thinks the US economic recovery is still in the nascent stages as evidenced by the recent onslaught of stronger-than-expected earnings and economic data. Geithner said, "We have a long way to go, but we are starting to see signs of stability, and these signs mark the first steps to recovery." On the economic front, US leading economic indicators rose last month for a fourth straight month. The Conference Board’s gauge rose +0.6% for the longest consecutive series of increases since 2004. Another report showed that manufacturing in the Philadelphia region unexpectedly expanded this month which was the first increase in almost a year. The economic and manufacturing data added to recent flurry of evidence that the recession may be ending.

On Friday, stocks and commodities soared, sending both the S&P 500 Index and crude oil to fresh 10 month highs! The US dollar fell after US existing home sales jumped to the highest level in nearly two years. Home purchases rose to a 5.24 million annual rate in July which was the highest since the financial crisis began in late 2007. On a percentage basis, existing home sales rose +7.2% which was the largest rise since records began in 1999. The median price fell -15%. The rally was enough to send the major averages back into positive territory for the week which is considered a positive reversal on a weekly basis and is a healthy sign. Furthermore, a new rally is now in place which means that the path of least resistance is now higher and that 3 out of 4 growth stocks will follow the market.

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PICTURED: The S&P 500 Index confirmed a new rally (produced a follow-through day) as it also rose above recent resistance.  The major averages made an impressive "positive reversal" on a weekly basis which also bodes well for the near term market outlook

Charts courtesy www.stockcharts.com

PICTURED: The Bank Index ($BKX +2.57%) charged to a new 2009 high, which is especially encouraging action concerning the broader market outlook. The financial group is an important leading indicator, as noted many times before in this report.  The financial group led the major averages' breakdown in 2007 and has helped lead the recovery as well.

Aeropostale Inc  (ARO +$3.67 or +9.28% to $39.55) is a high-ranked leader in the Retail - Clothing/shoe group that gapped up and hit a new all-time high today, rising from a flat base pattern triggering a technical buy signal. It was featured in yellow with new pivot point and max buy levels noted in the 8/21/09 Mid-Day BreakOuts Report (read here). It has a great annual earnings history (the A criteria), and the 2 latest quarterly comparisons showed +81% and +84% earnings increases, well above the investment system's +25% guideline. The number of top-rated funds owning an interest in its shares rose from 209 in Dec '08 to 232 in Jun '09, which is good news concerning the I criteria.

Disciplined investors avoid chasing stocks more than 5% above their pivot point, as doing so increases the chances that a normal pullback will prompt them to sell the stock -as investors should always limit losses by selling any stock that falls 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.