What’s Giving Bulls Reason To Cheer

Price
action was narrow and choppy in early trading,
though a late-afternoon
rally launched the major indexes well into positive territory at the close.

The
Dow Jones Industrial Average

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closed +4.56% at
7538.79. The S&P 500
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closed +4.00% at 847.92. The
Nasdaq

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closed +3.55% at 1213.78.

The markets managed to shake
off a negative report from the ISM, giving the Bulls reason to cheer for a
change. A potential near-term low has also been highlighted by Carolyn
Boroden
, though the duration of such a move remains unclear.

The biggest gainers from
today’s session were chemicals
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, +7.36%, computer
technology

(
$XCI |
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, +5.56%, telecoms
(
$XTC |
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, +5.29%, and insurance
(
$IUX |
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, +4.91%.

The biggest losers  were
in gold and silver
(
$XAU |
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, -3.03%, and healthcare
(
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,
-0.37%.

The Semiconductor Index
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$SOX |
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,
+4.89% at 249.91, and the Broker Dealer Index
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, +2.98% at
374.59, both closed a the top of their daily ranges, in Haggerty 1-2-3 setups.

U.S. Treasury Bonds
closed down ’30 at 113 ’10.

In economic news, The Institute
of Supply Management
dropped to 49.5% for September, from August’s reading
of 50.5%. Levels below 50% indicate contraction. Economists were looking for a
reading of 50.4%.

Volume was slightly above
average
at
1,684,124,000
on the NYSE, and 1,681,452,000

on the Nasdaq.

Market breadth was positive,
with NYSE advancing issues over declining issues by a ratio of 2.21, and up
volume over down volume by a 3.95 ratio. Nasdaq advancing issues over declining
issues came in at 1.25, and up volume beat down volume by a 3.06 ratio.

The
VIX
was -4.44 at 40.13. The TRIN
was -1.18 at 0.56
.

Leading the Dow higher were Du
Pont

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DD |
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, +9.86% at 39.63, Alcoa
(
AA |
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, +7.51% at 20.75, General
Electric

(
GE |
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, +6.28% at 26.20, 3M Company
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MMM |
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+5.73% at
116.28, Micorsoft Corp.
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MSFT |
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, _5.69% at 46.23, and Boeing
(
BA |
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,
+5.47% at 36.00.

Stocks in the news:

Computer hardware maker Dell
Computer

(
DELL |
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, +4.80% at 24.64, was upgraded by Bank of America to
“buy” from “market perform” with a 12-month price target of
$30.

Online retailer Amazon.com
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, +6.40% at 16.95, had its third-quarter earnings expectations raised
by Bear Stearns by 1 cent per share, and a new price target of $19.

Financial services company Fannie
Mae

(
FNM |
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, +9.53% at 89.85, shot up after the company announced that its
duration gap (a measure of the difference between the maturity of the company’s
assets and liabilities) had increased due to long-term rates, igniting 
mortgage prepayments.

Biotech company Forest Labs
(
FRX |
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, +9.55% at 89.85, raised its earnings guidance, with profits expected
to exceed previous a previous estimate of $0.57 by 30%. The stock was also a
member of TM’s  Momentum
List
.

Electric utilities company
TXU Corp
.
(
TXU |
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, -4.72% at 39.74,  was downgraded by Merrill Lynch
to “neutral” from “buy” with new guidance of $0.20 per
share.

Drug maker Wyeth
(
WYE |
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,
+5.06% at 33.41, was upgraded by Raymond James to “strong buy” from
“market perform” due to a lack of patent expirations and sales growth.

Also in the drug making business,
Alcon
(
ACL |
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PowerRating)
, -3.48% at 37.40, was downgraded by Bank of America to
“buy” from “strong “buy” based on the belief that
additional multiple expansion will be difficult in the near-term.

One of the day’s big losers was
Aeropostale
(
ARO |
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, -57.79% at 6.50, as the company reduced its fiscal
forecasts for the third and fourth quarters.

Oil services company Nabors
Industries

(
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, -1.83% at 32.15, warned that its third-quarter
earnings will fall short of expectations due to the fact that North American Gas
related activity has yet to materialize.

Retailer Target
(
TGT |
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,
+1.62% at 30.00, was downgraded by Salomon Smith Barney to “in-line”
from “outperform.”

Data storage company EMC
Corp
.
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EMC |
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PowerRating)
, +6.78% at 4.88, rose after an upgrade from Lehman Brothers
to “overweight” from “equal weight” based on valuation.