The major averages traded lower for most of the session and remained confined to a relatively tight trading range one day after the market produced a follow-through day (FTD) which confirmed the latest new rally attempt. Volume, a critical component of institutional demand, was reported lower on the NYSE and on the Nasdaq exchange which signaled large institutions were not aggressively dumping stocks. Decliners led advancers by a 3-to-2 ratio on the NYSE and by a 2-to-1 ratio on the Nasdaq exchange. There were 36 high-ranked companies from the CANSLIM.net Leaders List making a new 52-week high and appearing on the CANSLIM.net BreakOuts Page, lower than the 52 issues that appeared on the prior session. In terms of new leadership, it was encouraging to see new 52-week highs outnumber new 52-week lows on the NYSE and Nasdaq exchange. 

Stocks ended mixed but near their intra-day highs which was a very healthy sign considering the 6-day advance they just experienced. The inverse relationship between stocks and the US dollar is alive and well considering the recent action in both these markets. Tim Johnston, who manages $125 million for a private family office in New York told me that "This is not a bull market in stocks as much as it is a bear market in the dollar. The key is to watch the dollar." Many people on Wall Street agree with Tim and subscribe to the notion that the massive rally we have seen in stocks from the March lows has been the direct result of the massive coordinated global stimulus packages, not fresh earnings-powered growth. Typically, economic recoveries are led by the next batch of young entrepreneurial companies that sport strong sales and earnings growth.

Charts courtesy www.stockcharts.com

PICTURED: The Retail Index's ($RLX +0.52%) rally to a new 2009 high is a reassuring sign.

Baidu.com, Inc. (BIDU +$2.25 or +0.53% to $428.12) today posted its 6th consecutive gain on light or near average volume. It proved resilient near its 50 DMA line after its 10/27/09 gap down. It made an admirable stand above prior chart highs (that were the basis for its previously cited pivot point) since its last appearance in this FSU section on 10/28/09 under the headline "Chinese Internet Content Firm Gapped Down To Classic Chart Support Level".  In that report it was observed that, "Whenever a stock which has made a many-fold run up in price flashes its largest point loss on the highest volume down day in more than 10 months, such clearly negative action may be considered a technical sell signal." 

Broader market (M criteria) weakness and distributional pressure on the major market averages at the time heightened concerns investors might have while holding any stocks.  Since then, however, the market dug its heels in and produced a solid follow through day.  The stock also proved its resilience, but as recently noted, "Choppy action has not allowed it to form a sound base in recent weeks."  Patience may allow for a proper base to form, however there is not an ideal entry point under the guidelines now.

BIDU traded up as much as +23% from its price when featured in yellow in the 9/08/09 Mid-Day BreakOuts Report (read here). The number of top-rated funds owning BIDU's shares rose from 112 in Sept '08 to 160 in Jun '09, clear evidence its shares were being accumulated. An earlier FSU appearance described some of the more extensive prior coverage this Chinese Internet search provider has received (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.