Stocks traded higher again yesterday in response to a lower U.S. dollar and strong euro zone PMI manufacturing numbers. The Dow Jones Industrial Average rose 0.58% to its highest close since April 26.

The Dow’s charge higher was led by The Home Depot, Inc. (NYSE: HD), which rose 2.61%. American Express Company (NYSE: AXP) gained 2.24%, Microsoft Corporation (NASDAQ: MSFT) gained 1.82%, and Verizon Communications Inc. (NYSE: VZ) rose 1.2%. Gains were attributed to the election, strong quarterly earnings, and the approaching decision regarding the extent of a new stimulus plan by the Fed.

There was little in the way of economic reports to spur the market along, but a string of solid earnings reports helped steer the market higher. Dow member Pfizer Inc. (NYSE: PFE) posted better-than-expected earnings, but the stock fell slightly. And Art Technology Group, Inc. (NASDAQ: ARTG) jumped 45% following an announcement that Oracle Corporation (NASDAQ: ORCL) had agreed to pay about $1 billion for the company.

But Archer Daniels Midland Company (NYSE: ADM) fell 6.6% after fiscal Q1 earnings failed to meet expectations. The Clorox Company (NYSE: CLX) was off 4.2% after missing its fiscal Q1 target, and Energizer Holdings, Inc. (NYSE: ENR) fell 9.5% after the company reported that fiscal Q4 profit more than doubled, but sales were lower and the outlook for the next period looked lower.

The U.S. dollar traded lower following a surprising hike in rates by Australia. The euro rose to $1.4036 from $1.3888 on Monday. And the 10-year Treasury note was up taking its yield down to 2.594%.

At the close, the Dow Jones Industrial Average rose 64 points to 11,189, the S&P 500 gained 9 points at 1,194, and the Nasdaq was up 29 points at 2,534. Only 913 million shares traded on the NYSE, but advancers were ahead of decliners by almost 3-to-1. On the Nasdaq, advancers were ahead by 2.7-to-1 on volume of 539 million shares.

Crude oil for delivery in December was up 95 cents to $83.90 a barrel. The Energy Select Sector SPDR (NYSE: XLE) closed at $59.96, up 65 cents. December gold closed at $1,369.10 an ounce, up 20 cents, and the PHLX Gold/Silver Sector Index (NASDAQ: XAU) rose 1.45 points to 206.31.

What the Markets Are Saying

Even though stocks rose on a broad front yesterday, the indices were again stopped short by stubborn resistance that continues to provide a stream of steady sellers. The resistance is at the April high represented by the pattern called a “diamond” on the S&P 500 chart at 1,181 to 1,220.

As long as the indices continue to push up into the resistance, the bulls remain in charge. And the longer they can eat into the seemingly endless sell orders, the better the chances that a meaningful breakout can occur. 

The main catalyst for the rally has been the stubborn decline in the dollar. And again yesterday, it was the decline in the dollar that sent stocks higher. But the greenback is approaching a position of being extremely oversold, and the reversal in mid-October is still holding, forming what could be a double-bottom. 

Gold is also a part of the equation, and the minor correction in October matches the double-bottom on the dollar’s chart, making for a formidable combination of resistance to gains in equities. However, gold is in a powerful bull market, and following this minor consolidation will more than likely resume its march higher.

In addition to the election, Federal Reserve action and Q3 earnings, there are a lot of moving parts to the stock market’s engine. And when the fundamental outlook for many of the parts is so uncertain, stock buyers are usually hesitant to take a major bullish commitment.

Today’s Trading Landscape

Earnings to be reported before the opening include: Aetna, Agrium, Alexandria RE, Alpha Natural Resources, Alvarion, Ameristar Casinos, AOL, Arkansas Best, Capital Lease Funding, Centurytel, Cimarex, Clayton Williams, Clean Harbors, CommonWealth REIT, Consolidated Graphics, CVS Caremark, Devon Energy, Dixie Group, Dolan, El Paso, El Paso Pipeline Partners, Federal Signal, FelCor Lodging, Garmin, Genesis Energy, L.P., Great Wolf Resorts, Heartland Payment Systems, Hyatt Hotels, Inland Real Estate, James River Coal, Knology, Lincoln Educational Services, Medical Action, MGM Resorts, Molson Coors Brewing, Natural Gas Services, NewStar Financial, O2 Micro, Par Pharmaceutical, Parker Drilling, PennyMac Mortgage, PetroQuest Energy, Pulte Homes, QLT, Qwest, Reliant Energy, RR Donnelley & Sons, Sinclair Broadcast, SkyWest, Spectra Energy, Speedway Motorsports, SPX Corp., Steris, Tidewater, Time Warner, Triple-S Management, TRW Automotive, Warren Resources, WellPoint and Westlake Chemical.

Earnings to be reported after the close include: Alnylam Pharmaceuticals, Amdocs, American Medical, American Water, Atmos Energy, Avis Budget, BioMed Realty, Blackboard, Brightpoint, Catalyst Health Solutions, Celera, Charles River Laboratories, Chesapeake Energy, Churchill Downs, Cincinnati Bell, Concho Resources, Con-Way, Corrections Corp., Covance, DealerTrack, Delek US Holdings, Education Management, Equity One, Essex Property, ExlService, FARO Technologies, Federal Realty Investment Trust, Force Protection, Gartner, Genco Shipping & Trading, General Cable, Gilbraltar Industries, Given Imaging, Global Cash Access, Global Industries, Goodrich Petroleum, Hansen Medical, Haverty Furniture, Health Care REIT, Hill International, Huron Consulting, Insight Enterprises, Integrys Energy, Intrepid Potash, ION Geophysical, J&J Snack Foods, j2 Global, KAR Auction Services, Kenneth Cole, Kimco Realty, Kinross Gold, Kite Realty, Liberty Global, Martin Midstream, MasTec, McCormick & Schmick’s, Measurement Specialties, MercadoLibre, Monolithic Power, Murphy Oil, NABI Biopharmaceuticals, NCI, ON Semiconductor, Onyx Pharmaceuticals, OPNET, Pacer International, Papa John’s, PartnerRe, Penn Virginia, Plains All American Pipeline, Polypore International, ProAssurance, Protective Life, Providence Service Corp., Prudential, Qlik Tech, Qualcomm, Quality Distribution, QuinStreet, Regency Centers, Rock-Tenn, Schweitzer-Mauduit, Sierra Wireless, Silicon Motion, Smith Micro Software, Solera, Standard Parking, Stanley Furniture, TeleTech, Ternium S.A., THQ, Time Warner, Transocean, True Religion, United Online, ValueClick, Verisk Analytics, Vital Images, Volcano, WebMD Health, Western Gas Partners, Whole Foods and Yamana Gold.

Economic reports due: Bank Reserve Settlement, MBA purchase applications, Challenger Job-Cut Report, ADP employment report, Treasury refunding announcement, factory orders (the consensus expects 1.8%), ISM non-manufacturing index (the consensus expects 54), EIA petroleum status report, and FOMC meeting announcement (the consensus expects the Fed funds rated to remain at 0% to 0.25%).

If you have questions or comments for Sam Collins, please e-mail him at samailc@cox.net.