The major averages closed higher on Friday as volume surged across the board thanks to a series of options expirations. Advancers led decliners by almost a 3-to-2 ratio on the NYSE while, but they led only by a narrow 14-to-13 ratio 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, down from 40 issues that appeared on the prior session. New 52-week highs were in the triple digits on both exchanges, while new 52-week lows were in the single digits yet again.

Monday marked the anniversary of Lehman Brothers' infamous bankruptcy which triggered last year's violent stock market sell off and claimed scores of large financial institutions. The major averages fluctuated between positive and negative territory, but the day was relatively quiet was the major averages ended on a high note for all of the major averages. The major averages edged higher after retail sales topped analysts estimates last month and Federal Reserve Chairman Ben Bernanke said the recession is "very likely" over.

On Wednesday, stocks surged around the world as the US dollar continued falling and gold surged to a new high. The Federal Reserve said industrial production rose at a stronger than expected rate which was echoed other stronger than expected economic data released throughout the week. The Bloomberg Professional Global Confidence Index, a survey that measures global confidence, rose to +58.54 in September which is higher than the boom/bust reading of 50 and higher than last month's reading of 58.12. Confidence in the world economy held steady in September after reports suggested the recession may be finally over.

On Thursday, the market negatively reversed and closed lower after the latest round of economic data was released. The Commerce Department said that housing starts rose +1.5% last month to an annual rate of 598,000, led by construction of multi-family homes. This was the highest reading in nine months which bodes well for the possible "recovery" for housing prices. Elsewhere, the Federal Reserve Bank of Philadelphia said its general economic index rose to 14.1 in September from 4.2 in August. Both reports coupled with an unexpected decline in jobless claims, support Fed Chairman Ben S. Bernanke’s theory that the recession has likely ended. A separate report from the Fed showed that US household wealth rose by $2 trillion in the second quarter which effectively ended the largest slump in history. Net worth for households and non-profit groups rose to $53.1 from $51.1 trillion in the first quarter, reflecting the largest quarterly jump in stock prices since 1998 and the first increase in home prices in more than two years. This was the first gain in household wealth since the third quarter of 2007.

Stocks edged higher on Friday as the bulls continue to quell any bearish selling. The market is very strong, evidenced by the very steep rally over the past two weeks.

PICTURED: The S&P 500 Index is the common "benchmark" index money managers strive to keep pace with, and very few outperform it.  It has rallied +60.36% from its March low!  While its strong uptrend remains intact, keep in mind that as every day passes the chances of a more considerable pullback increase. Normally, one would like to see the market advance on heavy volume then pull back on lighter volume before resuming its uptrend.

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Defensive groups lagged other areas as the Gold & Silver Index ($XAU -1.79%) and Healthcare Index ($HMO -1.01%) were decliners on Friday.  Energy shares were mixed as the Oil Services Index ($OSX +1.07%) rose and the Integrated Oil Index ($XOI -0.40%) fell.  Tech shares has a mildly positive bias as the Internet Index ($IIX +0.18%), Biotechnology Index ($BTK +0.29%), and Networking Index ($NWX +0.31%) posted modest gains.

The Bank Index ($BKX -0.36%) also edged lower on Friday after Thursday's negative reversal.  For the near term it may be important to keep a close eye on financial stocks.  Financial stocks were described as a very important leading indicator for the broader market when the Bank Index's rally to a new 2009 high was shown in this IGW section on Wednesday (read here).  Below we will take a closer look at some very influential areas that have provided important strength during the market's current rally.  It is a sign of a healthy market environment when strength abounds across various industry groups.

Charts courtesy www.stockcharts.com

PICTURED 1: The Retail Index ($RLX +0.90%) has rallied +72.8% from its March low, and an upward trendline connects its March, July, and September lows. 

Charts courtesy www.stockcharts.com

PICTURED 2: The Semiconductor Index ($SOX +1.60%) has rallied +94.8% from its November 2008 low.  A trendline connecting at least 3 prior highs defines chart resistance which it has once again rallied near.

Charts courtesy www.stockcharts.com

PICTURED 3: The Broker/Dealer Index ($XBD +1.65%) has rallied +131.58% from its November 2008 low.  Its big percentage gain makes it very hard to question the importance of financial shares' impact on the broader market direction.

Aeropostale Inc  (ARO +$0.13 or +0.30% to $44.05) inched to a new all-time high close today with light volume behind its 5th consecutive up session. Its weekly graph below illustrates its streak of 5 consecutive weekly gains on ever-decreasing volume. It has not encountered any distributional action since it rallied above its 2008 highs, however  it is extended from a sound base and not buyable under the investment system guidelines now. Support to watch is at prior highs in the $38 area. 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. 

This a high-ranked leader in the Retail - Clothing/shoe group has advanced slowly, steadily, and quietly since 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 243 in Jun '09, which is good news concerning the I criteria. An annotated daily graph was included on 9/02/09 with its last appearance in this FSU section under the headline "Consolidation Near Prior Highs While Market Sputters. It found great support and continued higher as the market improved.

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.