Except for the Dow Jones Industrial Average's minor loss all of the major averages ended higher while the US dollar advanced.  The positive bias was in part attributed to the latest round of multi-billion dollar mergers and acquisitions. For the second straight day, volume was reported lower than the prior session on the NYSE and Nasdaq exchange, indicating that large institutional investors were not aggressively buying stocks as the indices rose. Advancers led decliners by about a 3-to-2 ratio on the NYSE and on the Nasdaq exchange. There were only 10 high-ranked companies from the CANSLIM.net Leaders List making a new 52-week high and appearing on the CANSLIM.net BreakOuts Page, better than the 4 issue that appeared on the prior session. In terms of new leadership, the recent action is a sign that there is none showing up.  New 52-week highs still outnumbered new 52-week lows on the NYSE, however new lows outnumbered new highs on Nasdaq exchange for a fourth consecutive day.

Before Tuesday's open, Warren Buffett announced his plans to buy Burlington Northern Santa Fe Corp. (BNI +27.51%) for a $44 billion cash and stock deal which is his largest buy-out ever. Meanwhile, Stanley Works (SWK +10.06%) said it will take over Black & Decker Corp. (BDK +30.97%) which sent both stocks higher. Burlington Northern gapped up and surged +28% after Buffett made his “all-in wager” on the nation’s economic future. Buffett said that his purchase was a bet on the US economy and was optimistic about the future.

Late Monday night, the International Monetary Fund (IMF) reported that it sold 200 metric tons of gold to the Bank of India. This alleviated a major amount of overhead supply and helped send gold futures surging to a fresh all-time high. Elsewhere, the Federal Reserve Board began its two-day meeting for monetary policy, and will announce their decision Wednesday afternoon. Tuesday marked Day 2 of a new rally attempt which means that, as long as Monday's lows are not breached, the earliest a possible follow-through day could emerge is Thursday.  It is a negative sign that volume has receded during the last two days and the S&P 500 failed to trade back above its 50 DMA line. It is also worrisome to see the action in most leading stocks continues to be questionable.

PICTURED: The S&P 500 Index posted a gain on lighter volume while consolidating, closing about 8 points below its 50-day moving average (DMA) line.

Charts courtesy www.stockcharts.com

PICTURED 1: The Gold & Silver Index ($XAU +6.38%) was a standout gainer.  The big gain helped it rally back above its 50-day moving average line for the first time in a week. 

Aeropostale Inc. (ARO +$0.09 or +0.24% to $38.25) posted a small gain today with lighter volume, overcoming a weak start for a second positive reversal in a row.  It also closed back above its July 20th high close, which is a somewhat encouraging sign. Last week's serious 50-day moving average (DMA) line violation led to previously noted technical sell signals. It essentially negated its 8/21/09 technical breakout with a close below July's highest close (its highest pre-breakout close), while it is currently trading near its prior highs in the $38 area which have been identified as important support.  More damaging losses would hurt its outlook.

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.  Its Relative Strength rank also fell to 76 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 237 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.