September was a very interesting month for stocks. After the final closing bell for the month and quarter rang, the current rally, which began on the August 29, 2007 follow-through day, remained intact. The major averages enjoyed the largest September advance since 1998, helped by the Federal Reserve cutting its target for interest rates by 50 basis points at their September meeting. Stocks rallied for the first half of the year but pulled back in late July and most of August as fear spread concerning the subprime and credit markets. However, the bulls showed up in the middle of August and sent stocks higher. The rally attempt was confirmed at the end of August when the Nasdaq Composite produced a sound follow-through day. Since then, we have seen healthy action in the major averages and a plethora of leading stocks!

Several of the major averages hit fresh record highs in the first few weeks of the third quarter. However, the party quickly ended when the bears showed up at the end of July and sent the market into a double digit correction.  The summer of 2007 will go down in history as one that was plagued with a confluence of disconcerting factors. The primary concern was the fallout in the subprime market intensifying to the point that it forced several of the world's largest brokerage firms to provide billions in capital to ''bailout'' their troubled subprime related hedge funds. In turn, this sparked a world-wide liquidity crunch. Out of nowhere, the music stopped for the red hot merger and acquisition market which was on track for a new record year in 2007. However, less than a month after Blackstone Group Lp (BX), one of the world's largest private equity firms, went public, the banks that were aiming to provide financing were unable to write the paper to fund certain multi-billion dollar deals. This sudden liquidity crunch shook capital markets everywhere from New York to Tokyo. 

Once the market rally ended in late July, shares fell nearly every week until the middle of August when the "panic" appeared to reach an extreme. After erasing its 2007 gains and turning negative for the year, on August 16, 2007 the S&P 500 Index positively reversed, which was the first day of the market's new rally attempt. On the very next day, the Federal Reserve came to the rescue by reducing their discount rate, the rate charged to banks, by 50 basis points in between meetings. Less than two weeks later, on August 29, 2007, the Nasdaq Composite produced a sound follow-through day which confirmed the market's current rally. It was encouraging to see the bulls show up only four short weeks after the late-July correction began - and the start of a new sustainable rally. Almost immediately, a handful of high-ranked stocks triggered technical buy signals which confirmed the nascent rally. 

The market did not light up until September 18, 2007. That was the day of the next official Fed meeting. On average, investors across the world were reticent to initiate new positions ahead of this important meeting. The Fed surprised the Street when they cut their overnight lending and discount rate by 50 basis points. This cut caught many market pundits by surprise and added more fuel to the rally 

The major averages enjoyed impressive gains last month. The NYSE Composite led its peers to the upside, rallying +4.61%. The Nasdaq Composite was a close second, with a handsome +4.05% gain. The Dow Jones Industrial Average rose +4.03% while the benchmark S&P 500 Index, added +3.58%. Meanwhile, the small cap Russell 2000 Index trailed its peers with a modest +1.59% gain.

For the quarter and the year, the market averages have put up mixed results. Continuing in the recent trend, tech and large cap stocks scored the largest gains last quarter, with the Nasdaq Composite and Dow Jones Industrial Average jumping +3.77%, and +3.63% respectively.  For the quarter the NYSE Composite vaulted a healthy, +1.68% while the S&P 500 Index rose +1.56%. However, the small-cap Russell 2000 Index, where the vast majority of growth stocks of interest under the system's guidelines reside, lost -3.39%.

PICTURED: The S&P 500 Index has rebounded to less than 30 points below its all-time high

For the year, the blue chip Dow Jones industrial Average is the clear victor thus far, rallying +11.85%. The Nasdaq Composite and the NYSE Composite have rallied +11.49%, and +9.85%, respectively, this year. The S&P 500 Index and the Russell 2000 Index have gained +7.65% and +2.26% this year. 

A handful of leading stocks also confirmed the healthy action when they surged into new high territory after triggering technical buy signals. Many of the market's current leaders were featured in various CANSLIM.net reports which have helped our readers stay one step ahead of the crowd. Three days before the August 29, 2007 follow-through day, CANSLIM.net released a Special Stock Report -''7 Stocks That Should Now Be on Your Watch List'' highlighting stocks that held up the strongest during the entire summer correction (read here).  Wynn Resorts Ltd. (WYNN -5.64%) and Crocs Inc. (CROX +1.37%), were both featured in that report, and they have surged nearly +40% and +10%, respectively. Since the follow-through day, CANSLIM.net has also published three Stock Bulletins, Navteq Corp (NVT +0.97%), China Medical Tech (CMED +1.30%), and Transdigm Group Inc (TDG -2.54%) which are up +15%, +14%, and +7% respectively from their pivot points.

Our staff of experts researches and then compiles these detailed summaries of selected stocks which warrant further investigation by investors. These stocks show strong upside potential based on the CAN SLIM^® investment system. Ideal buy candidates are also identified for members throughout each month, appearing in yellow in CANSLIM.net's Mid-Day Breakouts Report, or occasionally featured in timely CANSLIM.net Stock Bulletins which are promptly emailed to all members.

Institutional Buying Is A Powerful Force
 

Salesforce.com Inc.	- Kenneth Gruneisen
Ticker Symbol: CRM	Industry Group: Computer Software-Entprse	Shares Outstanding: 116,800,000
Price: $51.32 9/28/07	Day's Volume: 1,870,600 9/28/2007	Shares in Float:  94,600,000
52 Week High: $51.75 9/28/07	50-Day Average Volume: 1,857,500	Up/Down Volume Ratio: 1.3
Pivot Point: $50.06 5/21/2007 high plus .10	Pivot Point +5% = Max Buy Price: $52.56	Web Address: http://www.salesforce.com

C A N S L I M | StockTalk | News | Chart | SEC | Zacks Reports

CANSLIM.net Company Profile: Salesforce.com, Inc. provides on-demand customer relationship management (CRM) services to businesses and industries worldwide. Its Apex platform allows customers and partners to customize and integrate Salesforce CRM applications or build new applications. The company also offers AppExchange, an online marketplace for on-demand applications. It provides an array of CRM and business application services, which enable customers and subscribers to systematically record, store, and act upon business data; and to help businesses manage customer accounts, track sales leads, evaluate marketing campaigns, and provide post-sales services. The company's CRM services primarily focus on sales force automation, partner relationship management, marketing automation, and customer service and support automation. The company was founded in 1999 and is headquartered in San Francisco, California..  The company sports a very healthy Earnings Per Share (EPS) rating of 87 and a strong Relative Strength (RS) rating of 89.  Concerns are raised because it does not have a particularly impressive annual earnings growth history, or "A" criteria, yet future earnings estimates are high.  CRM resides in the Computer Software-Entprse group which is currently ranked 23rd of out the 197 Industry Groups covered in the paper, helping satisfy the "L" criteria. Insiders own about 19% of its shares, which provides decent motivation to protect and build shareholder value. From Sept '06 to Jun '07 the number of top-rated funds rose from 143 to 178, helping satisfy the "I" criteria. 

What to Look For and What to Look Out For: Look for CRM to make further progress above its prior high closes and follow through with confirming gains on enough volume to trigger a sound technical buy signal. A close back under its $50.06 pivot point would prompt concern.  Always limit losses per the 7-8% sell rule, and never hold a stock if it falls more than that much from your purchase price.

Technical Analysis: The stock traded above its pivot point but volume, a critical component of institutional sponsorship, has yet to meet the necessary guideline needed to trigger a proper technical buy signal. It would be very encouraging to see volume swell considerably with confirming gains that help this high-ranked leader trade above its $52.56 maximum buy price and continue higher. Its weekly chart clearly illustrates how this issue cleared all remaining overhead supply when it surged into new high territory and broke out of a long 7-month base at the end of September.

CANSLIM.net Profile: Ceragon Networks, Ltd. engages in the design, development, manufacture, and sale of point-to-point wireless backhaul solutions. Ceragon Networks' products are primarily used by cellular operators, and by organizations and enterprises. The company sells its products through a direct sales force, systems integrators, distributors, and original equipment manufacturers in North America, Europe, Middle East, Africa, Latin America, and the Asia-Pacific. Ceragon Networks was founded in 1996. It was formerly known as Giganet, Ltd. and changed its name to Ceragon Networks, Ltd. in 2000. The company is headquartered in Tel Aviv, Israel. The company's ranks excellent. The Earnings Per Share (EPS), Relative Strength, and Composite rating are all pegged at 99, the highest possible readings. Return on Equity of 14% is slightly below the 17% guideline.  The company has managed to increase its earnings by well above the +25% guideline in each of the past four quarterly comparisons versus the year earlier (satisfying the C criteria) and its annual earnings history (the A) is solid. CRNT resides in the Telecom-Wireless Equipment group which is currently ranked 31st of out the 197 Industry Groups covered in the paper, placing it in the much preferred top quartile.  This helps satisfy the L criteria of it being a leading company in a leading industry group.  Management owns 13% of its shares, which provides good motivation to protect and build shareholder value. 

What to Look For and What to Look Out For: The stock has cleared all technical resistance and odds favor further price gains.  Ideally, this stock would continue rallying on heavier volume over the next few days and weeks which would help confirm the breakout.  Disciplined investors know it is best to accumulate shares after a stock has risen above its pivot point but while it is still below its maximum buy price ($19.64 in this case), so they might watch for the chance to accumulate shares on a light volume pullback. Undisciplined buys can hurt your investment results.  Caution and a disciplined sell strategy could be required, and concerns would definitely be raised if the stock reverses to a close which negates its breakout above the $18.18 mark which was its best high close (on August 24th) prior to the latest bullish action. Technically, if that occurs, the stock becomes more likely to spend a lot more time consolidating in its prior base.  It is not wise to hold a struggling stock, leaving it open to get into bigger trouble or a fundamental disappointment. Always limit losses if any stock you buy closes 7-8% below your purchase price.

Technical Analysis: On Friday, September 28th, 2007, CRNT triggered a technical buy signal when it surged above its $18.70 pivot point with gains on heavy volume that was nearly two times its average total.  After briefly violating its 50-day moving average (DMA) line, this stock found prompt support and quickly returned to its old highs and beyond.  Whenever a stock explodes out of a sound base and vaults to new highs it suggests that there is strong institutional sponsorship (the I criteria). Thus far, the recent volume patterns have been bullish, which is best indicated by the fact that volume was light before the stock broke out and surged as the stock was climbing to new highs.  Notice how the volume totals have ramped up since its earlier breakout on April 30th.