The major averages closed lower on Friday and negatively reversed for the week. This was the first time that the major averages opened higher and closed lower on a weekly basis since the rally began 29 weeks ago (confirmed with the March 12, 2009 follow-through day). Volume was lower than the prior session on both major exchanges which helped the major averages avoid another distribution day. Decliners led advancers by an 8-to-7 ratio on the NYSE and by a 3-to-2 ratio on the Nasdaq exchange. There were only 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, lower from the 13 issues that appeared on the prior session. New 52-week highs outnumbered new 52-week lows on both exchanges, while new 52-week lows were in the single digits yet again.

The market closed mixed on Monday, but the indices ended near their intra-day highs as the bears failed to send stocks lower. The Conference Board said that its index of US leading economic indicators rose in August for the fifth straight time which capped the longest stretch of gains since 2004. It also echoed the recent batch of stronger than expected economic data which signals that the economic recovery continues. The gauge looks at leading economic indicators (has a projected outlook for the next three to six months) rose +0.6% which matched the Street's forecasts.

On Tuesday, stocks drifted higher amid signs that the global recovery is improving and another decline in the greenback. The dollar fell to a fresh 2009 low against the euro which helped send oil, gold, silver, copper and US Treasuries higher. Gold dominated the headlines and rallied over $13 higher after finding support above support (psychologically and technically important $1,000 per ounce level). Within 24 hours that all changed. By Wednesday's close, the dollar began to rally which caused the major averages to negatively reverse and sent a slew of commodities lower. Wednesday marked a distribution day for the major averages and set the stage for Thursday and Friday's sell off.

The major averages ended in the red on Thursday and Friday which caused the market to negatively reverse on a weekly basis. So far this is nothing more than a negative reversal which means there is a subtle change in the underlying health of the market. It is important to keep in mind that, since the March low, every pullback in the market has been muted at best and has not exceeded -8%. Therefore, the rally remains in full effect until one of the major averages falls more than -10% below a recent high or leading stocks begin to falter. Until one of these two events occur, the bulls remain in control and deserve the bullish benefit of the doubt.

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PICTURED: This Nasdaq Composite Index started higher but closed lower for the week, marking a negative reversal on above average volume on its weekly chart for the first time since the March lows.

Charts courtesy www.stockcharts.com

PICTURED: The Oil Services Index ($OSX -0.04%) has been pulling back near its June highs after recently blasting above them.

Netease.com Inc (NTES -$1.58 or -3.55% to $44.36) encountered resistance and promptly pulled back this week under its latest pivot point. That could be a sign it is due to spend more time consolidating after already rallying this year from lows in the mid-teens.  Keep in mind that this may be considered a late-stage base now, which has been noted as a riskier and more failure prone set-up. Meanwhile, important support is at its upward trendline and its 50-day moving average (DMA) line, where violations would raise concerns and trigger sell signals. After encountering heavy distributional pressure in August, NTES made an admirable stand above its 50 DMA line and prior chart highs in the $38 area. The high-ranked Internet - Content firm traded up more than +74.8% following its appearance in the April 2009 issue of the monthly newsletter, CANSLIM.net News (read here).

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.