The major averages rallied smartly on Monday which sent the benchmark Standard & Poor’s 500 Index above resistance and to a fresh 2009 high! Volume, a critical component of institutional demand, was higher than Friday's levels on the Nasdaq exchange and the NYSE which signaled large institutions were accumulating stocks. Advancers trumped decliners by over a 4-to-1 ratio on the NYSE and by over a 3-to-1 ratio on the Nasdaq exchange. There were 61 high-ranked companies from the CANSLIM.net Leaders List making a new 52-week high and appearing on the CANSLIM.net BreakOuts Page, up from the 22 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 rallied across the globe as the US dollar fell after Asian government's pledged to standby their economic stimulus packages. The 21-member Asia-Pacific Economic Cooperation group, which currently comprises over half of the global economy (approximately +54%), announced that they will maintain their massive economic stimulus packages well into 2010. The greenback fell to a fresh 15-month low which sent a host of dollar denominated assets higher: mainly stocks and commodities! The Dollar Index which measures how the dollar performs against six other currencies, fell to 74.820 and touched 74.679 which was the lowest level since August 2008. The Reuters/Jefferies CRB Index of 19 raw materials rose +2.9% which was its largest single day advance since August! The weaker dollar helped send gold to another record high which lifted a slew of gold stocks in its wake.

Turning to the economic front, the US government said retail sales grew +1.4% in October.  A slew of retailers jumped on the news as investors bet the forthcoming holiday season will top estimates. Several of the country's largest credit card issuers rallied after reporting charge backs (i.e. bad loans) fell for a six straight month. American Express Co.( AXP +2.7%) jumped to a fresh 2009 high as volume swelled. This was another stronger-than-expected economic data point which suggests the economic recovery is in full force. Elsewhere, Federal Reserve Chairman Ben Bernanke gave a speech to the Economic Club in New York and said economic “headwinds” remain in the economy. He also said that, “Significant economic challenges remain" He went on to say, "The flow of credit remains constrained, economic activity weak and unemployment much too high. Future setbacks are possible.” He also noted that we are in a much better place in Q4 2009 then where we in the same period last year.

It is important to note that the S&P 500 Index has rebounded +64% from its 12-year low in March which is a very impressive feat! Turning to the market, high-quality leadership among small cap growth areas remains very thin.

PICTURED: The Nasdaq Composite Index rallied to a new 2009 high with better volume behind its gain.

Charts courtesy www.stockcharts.com

PICTURED: The Bank Index has encountered resistance near important 2008 lows that were once a support level.

Credit Acceptance Corp (CACC +$0.75 or +2.21% to $34.75) opened the week with a small gap up gain today on average volume. It is continuing its consolidation in an orderly fashion above prior chart highs and its 50-day moving average (DMA) line in the $32 area.  They coincide to define an important support level to watch on pullbacks. The Finance - Consumer/Commercial Loans firm has maintained a great track record of annual and quarterly sales revenues and earnings increases, satisfying the C and A criteria of the investment system.  The high-ranked leader's 9/29/09 breakout gain was backed by more than 2 times average volume. Since featured it has also risen above its 2006-2007 highs ($33-34) to new all-time highs, which is a very reassuring sign of strength. CACC was featured in yellow in the 9/29/09 mid-day report (read here).

Investors might consider the current consolidation an opportunity to accumulate shares, however its recent price/volume action gives watchful investors an indication it is encountering some distributional pressure.  Without chasing it more than +5% above prior chart highs, one might watch for a sound new base to form. It has been consolidating for 4 weeks since hitting a 2009 high of $37.00. In another week it might meet the definition of a new "flat base" which, at 5-weeks minimum, is technically the shortest of all basic chart patterns.

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.