Stocks Digest Friday’s Large Move

Monday, September 27, 2010
Stock Market Commentary:

Stocks ended lower on Monday as investors digested Friday’s large move. Volume totals were reported lower on the NYSE and on the Nasdaq exchange compared to the prior session which signaled large institutions were not aggressively selling stocks. Decliners led advancers by a 3-to-2 ratio on the NYSE and on the Nasdaq exchange. New 52-week highs easily outnumbered new 52-week lows on the NYSE and on the Nasdaq exchange. There were 68 high-ranked companies from the CANSLIM.net Leaders List made a new 52-week high and appeared on the CANSLIM.net BreakOuts Page, lower than the 74 issues that appeared on the prior session, and down from triple digits on Monday.

Markets Shrug Off Several Multi Billion Dollar M&A Deals:

Stocks were confined to a relatively tight trading session as the US dollar edged higher and gold prices inched lower from record levels. Before Monday’s open, several multi billion dollar deals were announced: Southwest Airlines (LUV +8.71%) announced plans to purchase AirTran Holdings Inc. (AAI +61.32%) for about $1.4 billion, Wal-Mart Stores Inc.(WMT -1.11%) proposed to buy South African consumer goods distributor Massmart Holdings Ltd. for about $4.25 billion and Unilever NV announced plans to acquire beauty products manufacturer Alberto Culver Co. (ACV +19.57%) for $3.7 billion.

Best September Since 1939!

Barring some unforeseen decline, the Dow Jones Industrial Average is on track for its strongest September since 1939! The major averages have rallied in each of the past four weeks which is the longest winning streak since eight consecutive weekly gains which ended in late April (which corresponds with the highest levels of the year).

Market Action- Confirmed Rally:

The action since this rally was confirmed on the September 1, 2010 follow-through day (FTD) has been strong. Looking forward, the window is open for disciplined investors to carefully buy high-ranked stocks, while many pundits are expecting that markets may consolidate following recent gains. It was encouraging to see the bulls show up and defend support (formerly resistance) last week. The next level of support for the major averages is their respective 200-day moving average (DMA) lines while the next level of resistance is their respective April highs. Trade accordingly.

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