A series of stronger than expected economic and earnings data helped lift the market on Thursday. However, volume was lighter than the prior session on both exchanges which is the opposite of what bullish investors would like to see- higher volume advances and lower volume declines. Advancers led decliners by a 2-to-1 ratio on the NYSE and by better than a 3-to-2 ratio on the Nasdaq exchange. There were only 9 high-ranked companies from the CANSLIM.net Leaders List, making a new 52-week high and appearing on the CANSLIM.net BreakOuts Page, sharply lower than the 38 issues that appeared on the prior session. New 52-week highs still substantially outnumbered new 52-week lows on both major exchanges.

It was very encouraging to see the major averages quickly recover and close near their intra-day highs after Wednesday's ominous negative reversal. A batch of healthy economic and earnings data saved the day on Thursday and played a pivotal role in sending the market higher. Well known companies like Travelers Cos. (TRV +7.66%), McDonald’s Corp. (MCD +2.01%) and American Express (AXP +3.82%) fueled the recovery thesis that the worst recession since the 1930s is behind us.

On the economic front, the Labor Department reported that initial jobless claims rose to 531,000 last week which was exceeded the average estimate by 16,000. A separate report showed home prices unexpectedly slid which sent a flurry of homebuilders higher. The underlying theme is that lower home prices will spark demand which in turn will help increase revenues for these companies. Finally, the Conference Board released said its index of leading economic indicators grew for a sixth consecutive month which is a healthy economic data point.

So far, approximately +79% of the companies in the S&P 500 Index that have reported Q3 results have topped estimates, which would mark the highest rate since 1993! Overseas, China’s economy grew by its fastest pace in a year as stimulus spending and record lending growth helped the nation lead the world out of recession. The stronger-than-expected growth rate sparked concerns that Beijing would curb their fiscal and monetary measures in the near future. China's Gross domestic product surged +8.9% in the third quarter from the same period last year.

PICTURED: The Dow Jones Industrial Average (and the other popular market averages) bounced off support today!

Charts courtesy www.stockcharts.com

PICTURED: The Bank Index ($BKX +3.35%) promptly repaired its latest 50-day moving average (DMA) line, which was a somewhat encouraging sign.  Upon a subsequent breach of that important short-term average, its September and October lows are the next chart support level of concern.

Aeropostale Inc. (ARO +$1.58 or +3.59% to $44.05) posted a solid gain today with slightly higher volume, which helped it rally up from support at its 50-day moving average (DMA) line. Additional analysis in response to a member inquiry was included in the "Ken's Mailbag" section of the 10/21/09 After-Market Update (read here). Its color code was changed to yellow again, and new pivot point and max buy levels have just been noted. It appears to be building a new flat base while finding support at its 50 DMA line, its short-term average which has been enduring its first test since its latest sound breakout occurred.  A more serious 50 DMA line violation could subsequently raise concerns and trigger a technical sell signal, with the next important chart support level being its prior highs in the $38 area.

This high-ranked leader in the Retail - Clothing/shoe group has encountered some very obvious distributional pressure in recent weeks.  Its Accumulation/Distribution rank (see red circle on left) has slumped to a D from a B- on October 6th, when it last appeared in this FSU section.  Its Relative Strength rank (see the larger red circle on the right) also fell to 72 from 84 over that same time frame, indicating its relative under-performance in recent weeks. ARO 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 207 in Dec '08 to 238 in Jun '09, which is good news concerning the I criteria.

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.