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 MORNING MARKET COMMENTARY   - Monday, December 22, 2014  
Adam Sarhan Major Averages Posted Solid Weekly Gains
Kenneth J. Gruneisen, Founder and Contributing Writer, www.CANSLIM.net

The major averages finished the week up with the Dow gaining +3%, the S&P 500 advancing +3.4%, and the NASDAQ increasing +2.4%. Behind Friday's modest gains the volume was reported higher on the NYSE and on the Nasdaq exchange, inflated by options expirations. Breadth was positive as advancers led decliners by almost a 2-1 margin on the NYSE, but the mix was very even on the Nasdaq exchange. There were 73 high-ranked companies from the CANSLIM.net Leaders List that made new 52-week highs and appeared on the CANSLIM.net BreakOuts Page, versus the prior session total of 71 stocks. New 52-week highs expanded and outnumbered new 52-week lows on the NYSE and on the Nasdaq exchange. There gains for 7 of the 10 high-ranked companies currently on the Featured Stocks Page, a list that has recently been getting trimmed.

Weakness was noted as the uptrend came under pressure and the market (M criteria) earned the label of a correction.  Investors should still be watchful for technical sell signals in individual issues. Despite two consecutive gains and the major indices' impressive rebound above their respective 50-day moving average (DMA) lines, a substantial follow-through-day between Day 4-7 of a new rally attempt is what the fact-based investment system suggests is the best signal for investors to shift their bias again toward buying.

 

PICTURED: The NASDAQ gained 16 points to 4,765. It promptly repaired the recent 50-day moving average (DMA) line.

On Friday the Dow climbed 28 points to 17,806. The S&P 500 advanced 9 points, finishing within 10 points of an all-time high.

The major averages climbed as investors focused on Fed comments earlier in the week and stabilizing in oil prices. Following the FOMC statement on Wednesday, U.S. averages posted the biggest two-day rally since 2011, which spilled over into today. Additionally, oil prices stabilized after hitting a five-year low the week before. In economic data, a gauge of manufacturing in the Kansas Fed region climbed more than economists predicted for the biggest gain since July.

At the close, all 10 sectors in the S&P 500 were in positive territory. Energy was up the most, as Exxon Mobil (XOM +2.72%) and Chevron (CVX +3.58%) posted gains. The typically defensive consumer staples were relative underperformers. Shares of Wal-Mart (WMT -0.91%) fell on reports that the company is covering up bribes to Mexican officials. Gilead (GILD +2.76%) ended higher, on the heels of strong sales reports.

Treasuries advanced, as the benchmark 10-year note climbed 12/32 to yield 2.17%. In commodities, WTI crude on the NYMEX rallied +4.5% to $56.52/barrel but was flat for the week.

Disciplined investors know that new buying efforts should only be made in stocks when all fundamental and technical guidelines are met. This should be done as the stock is breaking out of a sound base pattern. Historic studies have shown that odds are not as favorable for investors when buying stocks on pullbacks. 

The Featured Stocks Page shows recent notes and Headline Links directing members to detailed analysis with data-packed graphs annotated by a Certified expert.  See the Premium Member Homepage for archives to all prior pay reports published.

Energy-linked groups were standout gainers on Friday as the Oil Services Index ($OSX +3.96%) and the Integrated Oil Index ($XOI +3.19%) ratcheted higher.  Gains from the Biotechnology Index ($BTK +0.95%) and the Networking Index ($NWX +0.77%) led the tech sector while the Semiconductor Index ($SOX -0.30%) edged lower. The Gold & Silver Index ($XAU -0.16%), Bank Index ($BKX -0.07%), and the Broker/Dealer Index ($XBD +0.11%) all finished flat. The Retail Index ($RLX +0.25%) posted a small gain.

Charts courtesy www.stockcharts.com

PICTURED: The Broker/Dealer Index ($XBD +0.11%) stayed above its 50-day moving average (DMA) line during its latest consolidation.

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