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INM Apr '09 - Keeping Careful Watch on the Market's Fuel Gauge
Kenneth J. Gruneisen, Founder and Contributing Writer, www.CANSLIM.net
CANSLIM.net


At the risk if looking foolish, those of us who follow the investment system's strict guidelines still remain in heavy cash positions with little or no exposure to stocks.  If the confirmed rally can be sustained, we can expect to identify more high-ranked buy candidates with the necessary substance to justify putting sidelined dollars to work.  Obviously, the ongoing Bear Market has done its job of eliminating much of the froth and reducing the risk for growth oriented investors.  That is good news for those of us who reacted intelligently to the facts and avoided a major setback.

Strong leaders are the necessary fuel to keep the market's engine running.  Think of the number of stocks showing up on the new highs list kind of like the gas gauge on your car's dashboard. If you really plan on driving very far, wouldn't you rather have a relatively full tank?  The benefit of past experience helps us to recognize that the current confirmed rally's biggest shortcoming is still its dearth of leadership.  There is much truth to the old adage "a rising tide lifts all ships."  Recalling the rallies off the market bottoms in October 2002 and March 2003, there was a much larger crop of healthy looking buy candidates as the market launched into those confirmed rallies.  Now, only a few high-ranked leaders have demonstrated the proper fundamental and technical characteristics to justify disciplined buying efforts.  Those isolated examples have made tempting buy candidates.  What gives rise to concerns that the market's "engine" might stall is the paucity of healthy market leaders.

The market has shown some recent improvement in terms of the sheer number of shares advancing versus shares declining on a daily basis. Below you can see the Advance/Decline lines for the NYSE and the Nasdaq exchange.  Its ongoing downtrend illustrates just how negative the market conditions have been.  Obviously, when we see those lines trending up, growth oriented investors have more favorable odds.

Earnings Season Ahead

Those of us who are chart readers realize that the market is a forward looking mechanism, and the price/volume action in a stock often gives us a hint of what is to come in terms of the company's fundamentals.  In the coming weeks, most publicly traded companies will be reporting their financial results for the quarter ended March 31, 2009.  Investors might notice stocks showing distinct strength or weakness as their earnings announcement date approaches.  Relying on the chart action can eliminate the guesswork and reduce the chances you'll be "surprised" by an earnings report.  In an ideal case, we might see a bullish technical breakout in the coming days, and then weeks later receive the "proof" that robust growth is truly present.  Price/volume action is considered the equally important "proof" of whether institutional investors are accumulating or selling shares.

As long as you've got the courage and risk tolerance to own individual stocks, and provided that proper discipline is used, there are reasons to have a proactive stance toward making new buy decisions.  If you need help in managing your buy and sell decisions effectively within the investment system's guidelines, our team is ready to assist you.  Few professionals have the integrity and training that we have, and we hope that our expertise can serve more of you well in the months ahead.

About Kenneth J. Gruneisen, Founder and Contributing Writer, www.CANSLIM.net :
Kenneth J. Gruneisen has successfully completed the CAN SLIM® Certification Program.  Mr. Gruneisen became a Registered Representative in 1987 and his career includes experience offering personalized assistance to investors with more than a decade of experience as a Registered Principal managing a branch office.

The recommendations made by CAN SLIM® certified individuals are their own and may not be attributed to the CAN SLIM® Certification Program, William O'Neil & Co., Investor's Business Daily or their affiliates. The CAN SLIM® Certification indicates only that the individual has successfully completed the CAN SLIM® Certification Program. CAN SLIM®, William O'Neil & Co., Investor's Business Daily and any of their affiliates are in no way responsible for any loss or damage caused as a result of the services provided by these individuals.


Comments contained in the body of this report are technical opinions only and are not necessarily those of Gruneisen Growth Corp. The material herein has been obtained from sources believed to be reliable and accurate, however, its accuracy and completeness cannot be guaranteed. Our firm, employees, and customers may effect transactions, including transactions contrary to any recommendation herein, or have positions in the securities mentioned herein or options with respect thereto. Any recommendation contained in this report may not be suitable for all investors and it is not to be deemed an offer or solicitation on our part with respect to the purchase or sale of any securities.

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The recommendations made by CAN SLIM® Certified individuals are their own and may not be attributed to the CAN SLIM® Certification Program, William O'Neil + Co., Investor's Business Daily or their affiliates. The CAN SLIM® Certification indicates only that the individual has successfully completed the CAN SLIM® Certification Program. CAN SLIM®, William O'Neil + Co., Investor's Business Daily and any of their affiliates are in no way responsible for any loss or damage caused as a result of the services provided by these individuals.

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