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Broad-based Rally Takes Market To 5-Month High!

|Includes: AAPL, AMZN, Baidu, Inc. (BIDU), CEO, CME, FCX, GLD, GOOG, IBM, ICE, PTR, SLV, SNP

The market opened strongly on better-than-expected ISM Services data, showing growth in the service sector, and, did not look back.  Almost every sector joined in on the rally.  Gold jumped again to close above $1140/ounce, another record high.  Silver also advanced, closing above $22.7.  Both GLD (gold ETF) and SLV (silver ETF) closed at record highs.  FCX reached a new 52-week high at $91.8, finishly strongly with a +4.52% gain.

Techs were very strong.  IBM broke out, nearing all-time high, to close at $137.66, up +1.78%.  BIDU vaulted +6.73%, going above $100 again!  Its October 100 weekly calls more than quadrupled today, up +420.83%!!  GOOG jumped more than +3%, or, $15.88, and tested $540 today.  We went intoGOOG Oct 530 calls this morning, scoring a double in just a few hours:

October 05, 2010
10:44 | HappyTrading GOOG ($538.30) Sold to Close 1008C530 Oct 530 calls, at $10.50 +119%
08:51 | HappyTrading GOOG ($535.50) Sold to Close 1008C530 Oct 530 calls, at $8.00 +67%
08:41 | HappyTrading GOOG ($535.70) Sold to Close 1008C530 Oct 530 calls, at $8.50 +77%
06:59 | HappyTrading GOOG ($529.90) Bought to Open 1008C530 Oct 530 calls, at $4.80

Both AAPL and AMZN took some time to climb up after the recent pullback, but, still recorded solid wins, up +3.7% and +3.53%, respectively.

Last Friday, in our Trading Room, I mentioned that ICE is about to break out:
October 1, 2010 7:13 AM
breakout setup

ICE charged above $111 today, up almost $4.  Its October 105 calls were up +112.5%!  We also discussed CME, which went up $7.73 today:

QUARRYMAN October 5, 2010 7:44 AM
I'm on the CME 260 calls at 7.60 .... wow what a high momentum chart!

The Dow finished up +193.45 points; SPX added +23.72 points; Nasdaq gained +55.31 points:

XME (metals and mining) added +2.75% while GDX (gold miners) garnered +3.08%.  XLE (energy) rose +2.35%.  XLF (financials) finally showed some strength, up +2.29%.  USO (oil) advanced +1.4% while OIH (oil services) went up +2.84%.  FXI (Chinese ADRs), discussed in Sector Watch this weekend, climbed +2.12%.


SPX added +23.72 points to close at 1160.75, above the 1160 level!  The daily MAs and MACD went up.


Nasdaq gained +55.31 points to close at 2399.83, just shy of 2400.  Its daily MAs and MACd also went higher.

Today's rally is significant, as it takes the market above the recent trading range to test the next nearest resistance.  We have been discussing/watching these levels:  SPX 1160 and Nasdaq 2400 (See Market Forecast).  Now, we'll have to see if the market can break through.  VIX came down to close below 22, but, we have been here recently.  Therefore, it does not necessarily guarantee that the support at 22 has been broken.  However, if VIX does push down to 20, I think it would go even lower (which means stronger market).  The global markets have been reacting much more to good news than bad news, signaling a little shift in the sentiment.  Still, many naysayer remain. 

Earnings are starting to come in.  MOS missed its earnigns estimates last night, but, provided bullish guidance.  MOS ended +3.42% higher today.  After the market today, YUM reported a solid quarter, but, did not see much immediate reaction this evening.  EQIX lowered its quarterly and full-year guidance, sending its shares down a whopping 25% in after-hours!!  AA will report on Thursday after the market close.  We also have unemployment rate and more job data later this week.  So, lots of potential market movers. 

The Chinese (Shanghai) market is closed until Friday.  If the global markets keep rallying this week, Shanghai could have some catching up to do on Friday.  When the Shanghai market is strong, it tends to drive the industrials higher, as analysts are focusing on China's economy to help drive the global economic recovery.  We'll keep our eyes on the mining and energy stocks.  (Quick note:  Chinese oil stocks have been soaring!  CEO, PTR, SNP)

Good night and HappyTrading! ™

Disclosure: no positions