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Saturday, October 2, 2010

WALL STREET >>> Best September In 70 Years

Bulls notched minor gains on 1st day of Q4
Major indexes stay above support lines
Wall Street started off October right where it left off last month and last quarter as the bulls used a batch of mostly upbeat economic indicators on Friday as an excuse to build on what was the Dow’s best September in seven decades.

The credit for Friday's upward move goes to new reports on U.S. consumer spending, consumer sentiment, construction spending and Chinese business activity that all exceeded Wall Street's expectations and reinforced the bulls' case that a double-dip recession is not in the cards.

“There had been bearish conjecture that we would be in store for a selloff that would reverse some of last quarter’s gains,” said an equity trading strategist at NYSE. “But when we flip the calendar to next week all bets are off with a market that will be pretty focused on macro data.”

The Dow Jones Industrial Average (DJIA – 10,829.68) reclaimed its foothold above the 10,800 level, ending on a gain of 41.6 points, or 0.4%. Twenty-two of the Dow's 30 components closed on positive ground, led by financial firms JPMorgan Chase and Bank of America. Meanwhile, Hewlett-Packard set the pace for the eight decliners.

The Dow remains perched above short-term support at its 10-day moving average, but actually finished the week down 0.3%.

The S&P 500 Index (SPX – 1,146.24) finished the day up 5 points, or 0.4%, after a brief trip into the red in mid-morning action. Like the Dow, the SPX is poised above rising support from its 10-day trendline.

Finally, the Nasdaq Composite (COMP – 2,370.75) spent plenty of time below the breakeven line, but managed to eke out a daily gain of 2.1 points, or roughly 0.1%. The SPX ended the week off 0.2%, while the COMP shed 0.4% from last Friday's close.

However, the markets closed off their highs and were briefly derailed by a disappointing report on U.S. manufacturing activity in September that spooked some traders. And while the markets managed to pile onto their September surge, the gains weren't enough to extend Wall Street's four-week win streak.

Still, Friday's rally marked an upbeat start to October and the fourth quarter and came after the Dow soared 7.7% last month -- its best September since 1939 and strongest month overall since April 2001. Those gains were driven by evidence the markets’ double-dip recession fears were overblown and hopes the midterm elections will result in gridlock in Washington.

Crude futures continued to climb today, with black gold catching a boost from a round of relatively well-received economic data. The solid reports translated to softness in the U.S. dollar, making crude oil more attractive to traders holding foreign currencies. Crude oil for November delivery tacked on $1.61, or 2%, to finish at $81.58 per barrel -- a seven-week high. For the week, crude rallied an impressive 6.6%.


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