The major averages rallied on Thursday thanks to another decline in the dollar, Alcoa's stronger than expected Q3 results, and a surprise jump in retail sales. Volume was reported higher than Wednesday's levels, which is considered a somewhat encouraging sign of institutional sponsorship. Advancers led decliners by more than a 2-to-1 ratio on the NYSE and by about a 4-to-3 ratio on the Nasdaq exchange. There were 57 high-ranked companies from the CANSLIM.net Leaders List that made a new 52-week high and appeared on the CANSLIM.net BreakOuts Page, higher than the 36 issues that appeared on the prior session. New 52-week highs were in the triple digits and substantially outnumbered new 52-week lows which were in the single digits on both major exchanges.  The recent expansion in the new highs list is another encouraging sign of healthier market action, as any sustainable market rally requires a healthy crop of strong leaders.

Alcoa (AA +1.06%), the country's largest aluminum producer, rallied after setting the stage for another stronger-than-expected earnings season. On average, nearly 75% of companies topped analysts estimates when they reported their second quarter results. The actual numbers were not as impressive as the fact that the vast majority topped the Street's forecast. Only time will tell how stocks will react to the third quarter's results.

Elsewhere, housing stocks caught a bid after Treasury Secretary Timothy Geithner said the housing market is improving and House Speaker Nancy Pelosi said Congress will consider extending a tax-credit for home buyers. The government reported that first-time jobless claims fell to 521,000 last week, which was the lowest level since January and lower than the Street's estimate of 540,000 claims. Stocks advanced after retail sales rose for the first time in 13 months as discounts continued to attract shoppers. Retail Metrics released a report that showed sales at US chains open at least a year rose +1.1% last month and nearly seventy percent of retailers reported sales results that exceeded the average of estimates it has compiled. The US dollar fell again, which sparked a rally in commodities and helped send gold to another new all-time high.

PICTURED: The S&P 500 Index found support at its 50-day moving average (DMA) line just above a trendline connecting its March-July lows.

Charts courtesy www.stockcharts.com

PICTURED: The Oil Services Index ($OSX +3.31%) rallied to a new 2009 chart high on Thursday.

Pegasystems Inc  (PEGA +$0.35 or +1.02% to $34.41) posted a 4th consecutive gain on light volume today, rallying toward all-time highs after its latest test of support at its 50-day moving average (DMA) line. Since its last FSU section appearance the high-ranked Computer Software - Financial firm briefly violated an upward trendline connecting its July-September chart lows, an initial chart support level.  The group's RS Rating (see red circle) was also previously noted for having slumped to D+ from a B when PEGA first triggered a technical buy signal as its broke out from a "double bottom" base when featured in the 7/29/09 mid-day report (read here).  However, the stock has a 94 Relative Strength rank now, and it is a reassuring sign to see its Relative Strength line (the jagged blue line) recently rising above its August highs.

PEGA has shown solid sales revenues increases and +25% earnings increases in the 3 last quarterly comparisons versus the year ago period. It also appears to have an easy comparison in the upcoming report for the quarter ended September 30, 2009 versus the year ago period's earnings of only 6 cents per share. 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.