Stocks started off slow again yesterday with some early selling, but positive comments from Fed Chairman Ben Bernanke, along with supporting economic reports, turned the tide and the major averages.

The August producer price index (PPI) came in with a better-than-expected 1.7% month-over-month increase, and core prices were stronger than anticipated, too. Then the New York Fed’s Empire State Manufacturing Survey for September climbed more than expected, and the advance retail sales report for August made the sharpest monthly jump in more than three years.

But the real turn came when Bernanke said that the recession is “very likely over.” Stocks and commodities rallied on the news.

However, banks were slow to turn, and Citigroup (C) held the financial sector back by falling 8.85%. Best Buy (BBY) posted worse-than-expected earnings and fell more than 5%, and Kroger (KR) missed its earnings target and fell almost 7.5%.

At the close, the Dow Jones Industrial Average (DJI) had gained 67 points to 9,683, the S&P 500 (SPX) rose 3 points to 1,053, and the Nasdaq (NASD) gained 11 points to 2,102.

Volume on the NYSE reached 1.5 billion shares with advancers over decliners by almost 3-to-1. On the Nasdaq, advancers were ahead by 3-to-2 with volume of 695 million shares.

October crude oil rose $2.07 to $70.93 a barrel, and the Energy Select Sector SPDR (XLE) closed at $54.54, up 54 cents (and that’s no misprint, just a lot of 54s).

December gold rose $5.20 to settle at $1,006.30, and the PHLX Gold/Silver Index (XAU) gained $4.06 to $171.08.

What the Markets Are Saying

The shorts got smacked again as early selling was quickly reversed and they had to seek cover. But yesterday was just a bit different than other sessions this month. This time the volume expanded to 1.5 billion shares on the Big Board. This is not a big increase, but enough to signal us that bigger money is starting to move in on the market.

Anyone who is still short should be concerned.

The S&P 500 closed at 1,052.63, less than 4 points from its high, which happens to fall exactly on the resistance line of the bull channel that has been forming since March. And the NYSE Composite closed almost exactly on that important line. A higher close will break the resistance, and along with that we should expect to see some serious money re-enter the market.

The internal indicators are now modestly overbought, but nothing close to the overbought conditions of July. The sentiment indicators tell us that the public and the letter writers are scared, while the insiders have already bought.

But just because now is the time for the buyers to step up doesn’t mean that they will.

With so many technical factors telling us that a major breakout is about to occur, it would be disappointing if they failed to act, and the market would almost certainly fall back to the first support zone at 1,010 for the S&P 500.

This is “D-Day” for the stock market.

Today’s Trading Landscape

Earnings to be reported include: Apogee Enterprises (APOG), CKE Restaurants (CKR), CLARCOR (CLC), Comtech Telecommunications Corp. (CMTL), Dress Barn (DBRN), Dynamex (DDMX), Herman Miller (MLHR) and Oracle Corp. (ORCL).

Economic reports due: mortgage applications, consumer price index (the consensus expects 0.4%, ex-food and energy it expects 0.1%), Treasury’s international capital flows, industrial production (the consensus expects 0.7%), capacity utilization rate (the consensus expects 69.0%), U.S. Energy Department oil inventories and NAHB housing index.

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