The major averages bounced at their respective 50-day moving average (DMA) lines on Monday after the dollar fell and the Institute for Supply Management released a strong service index. Volume was reported below average and below Friday's levels, which was not an encouraging sign, since volume had expanded as the market declined recently. However, it was encouraging to see advancers trump decliners by over a 4-to-1 ratio on the NYSE and by almost a 3-to-1 ratio on the Nasdaq exchange. There were 22 high-ranked companies from the CANSLIM.net Leaders List that made a new 52-week high and appeared on the CANSLIM.net BreakOuts Page, nicely higher than the 4 issues that appeared on the prior session. New 52-week highs still outnumbered new 52-week lows on both exchanges.

The US dollar fell, which helped send a slew of other capital markets higher, mainly helping stocks and precious metals rally. Normally, dollar denominated markets rally when the dollar falls due to the fact that a weaker dollar makes the underlying investment "cheaper" for foreign investors. It is important to note that crude oil continues to lag its peers and is having a very difficult time rallying in recent weeks. This is a negative divergence because crude may be telling us that economic demand, a key bullish component, may be lagging. Time will tell if this is just a short-term anomaly or if other capital markets will follow in crude's bearish footsteps.

The Institute for Supply Management’s released its gauge of non-manufacturing businesses (a.k.a. service index) which was stronger than expected and the first month of "positive growth" in a year.  The index rose to 50.9, which was slightly above the boom/bust line of 50 and higher than the 48.4 reading expected on Wall Street. Financial stocks caught a bid after Goldman Sachs (GS +3.81%) upgraded a slew of financial companies and said they believe large banks will outperform regional lenders. The current rally remains under pressure which means caution remains the better part of valor.

PICTURED: The Dow Jones Industrial Average bounced off its 50 DMA line on Monday.

Charts courtesy www.stockcharts.com

PICTURED: The Semiconductor Index posted a gain and bounced at its 50-day moving average (DMA) line.  There were similar bounces at the 50 DMA lines for the Bank Index ($BKX +3.21%) and Retail Index ($RLX +1.35%), and it would be encouraging to see each of these influential indexes make a stand at their respective short-term average lines.

Salesforce.com, Inc. (CRM +$1.91 or +3.93% to $56.42) posted a gain today on light volume after 4 consecutive losses on light volume, quietly consolidating above prior highs in the $55 area, an initial support level. More substantial technical support to watch is at its upward trendline and its 50 DMA line now coinciding in the $51 area. It was recently noted as it rose from a "3-weeks tight" type pattern and it stubbornly held its ground since its earlier "breakaway gap" for a considerable gain on 8/21/09 with more than 5 times average volume.  The number of top-rated funds owning its shares rose from 272 in Sept '08 to 295 in Jun '09, which is reassuring news concerning the I criteria.  It needs more time to form a new sound base before any new or add-on buying efforts might be appropriate under the investment system guidelines.

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