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The Bull is Alive and Well

by Sam Collins 11/06/09

A combination of strong earnings from a big-cap technology stock and a pair of positive economic reports resulted in a broad-based rally yesterday that took all 30 of the Dow's components higher.

Cisco's (CSCO) better-than-expected earnings reported after the close Wednesday was the catalyst for a strong opening in the technology sector that swept almost all large-cap techs along with it. In addition to reporting earnings that beat estimates, Cisco said that its outlook is solid and it authorized an additional $10 billion for its share repurchase plan. The large-cap tech explosion gave the Nasdaq (NASD) its best day since July.

Data from the International Council of Shopping Centers and Goldman Sachs showed that retailers had a gain in sales for the secondstraight month in October. And early yesterday investors were treated to news showing a weekly decline in jobless claims with non-farm productivity surging 9.5%. It marked the largest gain in productivity since 2003 and set the stage for a positive jobs report today.

At the close, the Dow Jones Industrial Average (DJI) was up 204 points to 10,006, the S&P 500 (SPX) gained 20 points to 1,067, and Nasdaq rose 50 points to 2,105.

Volume on the NYSE totaled 1.3 billion shares with advancers ahead of decliners by 5-to-1.

Nasdaq traded 734 million shares and advancers there were ahead by 4-to-1.

December crude oil fell 78 cents to $79.62, and the Energy Select Sector SPDR (XLE) rose 96 cents to $57.23.

Gold for December delivery rose $2 to $1,089.30 an ounce in choppy trading, and the PHLX Gold/Silver Index (XAU) closed at $170.71 for a gain of $1.04.

What the Markets Are Saying

Thursday's dramatic acceleration, coupled with a "key reversal day" on both the S&P 500 and the Nasdaq on Monday, leads me to say the following:

Chartwise what we have on Nasdaq is a new two-point support line with the July 8 low connecting with Monday's key reversal day intraday low of 2,024. (See the S&P and Nasdaq's chart here.)

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