The S&P 500 Index and Nasdaq Composite Index negatively reversed one trading day after a new rally was confirmed. Volume was lower than Friday's inflated options expiration levels on both exchanges, which signaled that large institutions were not aggressively dumping stocks to start the new week. Advancers narrowly led decliners on the NYSE yet the bias was slightly negative on the Nasdaq exchange. There were 31 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 24 issues that appeared on the prior session. New 52-week highs solidly outnumbered new 52-week lows on both exchanges while new lows were in the single digits again.

Overnight, Asian stocks soared following Friday's strong performance in the US. That set the stage for a positive open in the US, but the buying demand quickly waned as fears returned that more bank failures were on the horizon. SunTrust Chairman and Chief Executive Officer James Wells III said in a speech at the Rotary Club of Atlanta that "This credit cycle has yet to play itself out...We do not expect things to improve for the banking industry in the very near future." He also said "the industry is a long way from declaring any sort of victory." Mr. Wells made it clear that he expects lenders to face more credit losses and commercial real estate may continue to decline through 2010. Elsewhere, famous bank analyst Dick Bove said he expects more than 100 more banks to fail before we are out of the woods. Both comments put pressure on the highly influential financial sector.

Automobile companies slid as the "cash for clunkers" program entered its last day. Commodity stocks also pulled back and closed lower as the US dollar edged higher. On a pure valuation basis, the benchmark S&P 500 Index is getting up to a level value investors call "expensive", having surged over +50% from a 12-year low in early March to be currently valued at 18.9 times the profits of its companies - the most expensive level since 2004. Over the weekend, central bankers met at their annual symposium in Jackson Hole, Wyoming and said the global economy is pulling out of the recession. Federal Reserve Chairman Ben S. Bernanke and European Central Bank President Jean-Claude Trichet were among the two largest names there that echoed this point.

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PICTURED: The Nasdaq Composite negatively reversed for a small loss on about average volume.

Influential areas reversed early gains on Monday and ended with losses, including the Bank Index ($BKX -1.59%), Broker/Dealer Index ($XBD -0.86%), and Retail Index ($RLX -1.55%). The tech sector also ended widely lower as the Networking Index ($NWX -0.96%), Semiconductor Index ($SOX -0.78%), and Internet Index ($IIX -0.60%) erased their morning gains and ended unanimously in the red.  Meanwhile the Healthcare Index ($HMO +0.74%) and Biotechnology Index ($BTK +0.53%) posted modest gains, and energy shares also rose, boosting the Oil Services Index ($OSX +0.99%) and Integrated Oil Index ($XOI +0.71%) modestly.

Charts courtesy www.stockcharts.com

PICTURED: The Oil Services Index ($OSX +0.99%) recently found support near its 50-day moving average line and is rallying near prior chart highs.  Energy stocks have been helped by rising oil prices. Crude set fresh highs for the year at $74.81 per barrel before settlig at $74.37 per barrel, up +0.6%.

Pegasystems Inc  (PEGA +$2.49 or +8.36% to $32.40) gapped up today for a considerable gain and new high close with volume nearly 4 times average, its 5th consecutive gain on ever-increasing volume.  As noted in its last appearance in this section on 8/11/09 (read here), "studies have shown that approximately 40% of successful breakouts pull back and re-test their pivot points before continuing higher."  Prior highs which were old resistance in the mid-$27 area have recently served as a technical support level along with its 50-day moving average line (now $26.87). It proved resilient and found great support during a brief market correction which recently led many stocks to break down at key chart support levels.

PEGA posted a considerable 8/05/09 gain with nearly 5 times average volume following strong Q2 earnings and raised guidance. It first triggered a technical buy signal when rising from the "double bottom" base on the day it was featured in the 7/29/09 mid-day report (read here).  The Computer Software - Financial firm has shown solid sales revenues increases and +25% earnings increases in the 3 last quarterly comparisons versus the year ago period. The previously noted downturn in annual earnings (the A criteria) from 2003 to 2006 has been followed by a solid turn around and big earnings increases in '07 and '08, and Street expectations for '09 are calling for well above +25% growth.

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.