Another strong session going into options expiration tomorrow. The indices had a large gap up at the opening, backed and filled, pulled back quickly in the morning but held support. That was key. When support held they started a rally that retested the highs, backed off and then moved through them, and in the last hour spiked up, reaching new 5-month highs, at 870 on the S&P 500 and nearly 1359 on the Nasdaq 100. Only in the last 15-20 minutes did the market pull back and pare the gains.

Net on the day the Dow was up 95.81 to 8125.43, the S&P 500 up 13.24 to 865.30, and the Nasdaq 100 up 36.47 to 1352.98, nearly 3 percent. The Philadelphia Semiconductor Index (SOXX) gained 8.27, more than 3 percent

Advance-declines were 4 to 1 positive on New York, but only 2 1/2 to 1 positive on Nasdaq. Up/down volume was about 4 to 1 positive as well on New York on total volume of under 1.6 billion. Nasdaq traded more than 2.3 billion and had about a 6 1/2 to 1 positive volume ratio.

TheTechTrader.com board was generally mixed, but mostly higher. The handheld group was up, with Apple (AAPL) up 3.81 at 121.45, Research in Motion (RIMM) up 3.61 to 67.51, and Palm Inc. (PALM) up 68 cents to 9.90 on more than 10 million.

Stem cell biotech Geron (GERN) at 5.49 was up 48 cents on more than 4 million. General Electric (GE) was up 44 cents to 12.27 on 132 million ahead of earnings tomorrow morning. DryShips (DRYS) advanced 28 cents to 5.55, but in the aftermarket on news of a financing traded just under 6. Amazon (AMZN) gained 2.54 to 77.25, and the Direxion Large Cap Bull 3X Shares (BGU) was up 1.23 to 28.98.

The iShares MSCI Brazil Index ETF (EWZ) was also strong, up 96 cents to 44.56.

On the downside, UltraShort Real Estate ProShares (SRS) fell 2.58 to 28.29, and the Direxion Large Cap Bear 3X Shares (BGZ) was down 2.37 to 47.07.
Stepping back and reviewing the hourly chart patterns, the indices firmly broke out of their 3-day downtrend, by gaping up in the morning through price, moving average and trendline resistance. We have now have reached 6-week rally highs and new 5-month 2009 highs on both indices and are quite overbought (+218 on the McClellan Oscillator). Tomorrow is Friday options expiration day, and it could be a wild one.

Good trading!

Harry

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