The stock market ended mixed on Monday after trading in a very tight range for most of the session. Volume, an important indicator of institutional sponsorship, was lower than Friday's levels on both major exchanges which suggested large institutions were not aggressively selling stocks. Advancers led decliners by about a 8-to-7 ratio on the NYSE and were roughly even on the Nasdaq exchange. There were 29 high-ranked companies from the CANSLIM.net Leaders List that made a new 52-week high and appeared on the CANSLIM.net BreakOuts Page, less than the total of 45 issues that appeared on the prior session. Leadership among high-ranked growth stocks had dried up in recent weeks, so the expansion in new highs this week has been a welcome improvement. New 52-week highs solidly outnumbered new 52-week lows on the NYSE and on the Nasdaq exchange, and new lows were in the single digits on both exchanges.

Stocks vacillated between positive and negative territory as the dollar edged higher and a slew of commodities continued pulling back. The light volume day was considered normal after Friday's news-dominated session. Gold closed lower for the third straight day and has shed over 100 points since last Thursday's all-time high. In the early afternoon, Federal Reserve Chairman Ben Bernanke gave a speech at the Economic Club of Washington D.C. and said it was too early to determine the sustainability of this recovery. Bernanke also said that he sees modest economic growth in 2010 and does not believe inflation is a threat at this point. He also said that tight credit markets and a 10% unemployment rate could hinder future economic growth.

Last Friday's stronger than expected jobs report was bitter sweet. At face value the report is a net positive for the economy because it shows that employers may begin adding jobs in the near future. However, it also suggests that the Fed may begin raising rates as the economy improves. Currently, the Fed's overnight lending rate stands near a historical low of 0-.25% which is sharply lower than the +5.25% seen in early 2007 before the financial crisis began. That coupled with a weaker dollar has played a pivotal role in the robust 8-month rally. Bernanke reaffirmed the Fed's position that interest rates will likely remain low for an extended period of time but reiterated the importance of analyzing future economic data as it emerges.

Looking at the recent action in the market, the major averages continue acting well as they remain perched just below resistance (their respective 2009 highs) and above their respective 50-day moving average (DMA) lines. Both these factors are considered healthy and bodes well for this 8-month rally. The Nasdaq continues to experience formidable resistance just above 2,200 while the benchmark S&P 500 Index faces resistance just above 1,115. The blue chip Dow Jones Industrial Average remains the strongest of it peers and currently faces resistance just above 10,500. Until the major averages close above these levels, expect the bracketed (sideways) action to continue.

PICTURED: The Nasdaq Composite Index closed below resistance for the fourth consecutive session.

Charts courtesy www.stockcharts.com

PICTURED: The Healthcare Index ($HMO +1.40%) was a standout gainer on Monday, while consolidating near 2009 highs.

AsiaInfo Holdings, Inc. (ASIA +$5.61 or +22.35% to $30.71) gapped up today for a considerable gain on almost 8 times average volume for a new 52-week high after announcing a merger with Linkage Technologies International Holdings Limited, leading providers of software solutions and IT services for the telecommunications industry in China.  It is extended from its latest sound base now, and disciplined investors would avoid chasing it more than +5% above its pivot point. 

Gains with above average volume helped it rally to new 2009 highs following a 10/29/09 gap up for a big gain after reporting solid earnings for the period ended Sept 30, 2009 that beat expectations as it also raised guidance. It found prompt support near its 50-day moving average (DMA) line, a textbook chart support level, after a 7 session losing streak with losses on high volume triggered technical sell signals and briefly negated its latest breakout.

ASIA was featured 10/14/09 in the mid-day report (read here) as it gapped up for a new 52-week high with 5 times average volume, triggering a technical buy signal by blasting above its pivot point.  Disciplined entries and exits are critical to investors' success with the investment system. ASIA was first featured in the August 2009 CANSLIM.net News (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.