After a “wiggle” down at the opening yesterday, a better-than-expected GDP number vaulted stocks to the biggest day up in months. Every one of the S&P 500’s (SPX) 10 major sectors gained, with the index up 2.25%, and the technology-heavy Nasdaq (NASD) was up 1.8%.

Following the initial moments, the entire day was spent on the upside. Even after a short round of late afternoon profit-taking, buying surged in the final moments leaving the Dow Jones Industrial Average (DJI) just 7 points from its intraday high. And an earlier report of an increase in weekly jobless claims was almost completely ignored. 

Of the Dow’s 30 components, 29 gained ground, with Alcoa (AA) leading the pack with a gain of 9%, followed by Caterpillar (CAT), which rose 5.2%. Proctor & Gamble (PG) helped by releasing a Q1 report that beat forecasts and gained 4%, and American Express (AXP) led the financials, gaining 5.1%.

At the closing bell, the Dow was up 200 points to 9,963, the S&P 500 gained 23 points to 1,066, and Nasdaq rose 38 points to 2,098.

The NYSE traded 1.5 billion shares with advancers ahead of decliners by 5-to-1. On the Nasdaq advancers led by 9-to-4 on volume of just les than 1 billion shares.

December crude oil gained $2.41, closing at $79.87 a barrel, as optimism over stock market gains and economic growth raised prices across the board. The Energy Select Sector SPDR (XLE) gained $1.55, closing at $57.49. 

Gold for December delivery was up $7.20 to $1,037.70 an ounce, and the PHLX Gold/Silver Index (XAU) gained $7.12, closing at $162.04. 

What the Markets Are Saying

Yesterday’s reversal was attributed to news that Q3 GDP has surged to an annual rate of 3.5% versus an expected 3.2%. But it is curious how these “big news” announcements so often coincide with a major support or resistance indicator.

Note how the reversal occurred exactly at the major support points of the 50-day moving average, the intermediate bull channel’s support line, and the low connecting point of the Relative Strength Index (RSI). And that’s why I have been loathe to jump aboard the bear train that all this week has been blowing its horn in the media.

Both the S&P 500 and Nasdaq reversed, and Nasdaq’s reversal again tracked its 50-day moving average, turning up from it just as its RSI made the lowest number since July.  And the Dow closed well above its 20-day moving average, launching a trading buy signal.

Breadth on Thursday confirmed the turnaround with a margin of five advancers for every decliner on both exchanges, and volume rose sharply on both exchanges.

If Thursday’s dramatic turn has legs, then we should see some follow-through today, and perhaps even a complete erasure of the week’s net loss. 

Sentiment indicators are telling us that the public has again turned bearish with 33.65% bullish and 42.31% bearish, but those numbers have been reversing almost weekly along with our other sentiment indicators. And the internal indicators (MACD, momentum, stochastic, etc.) are reversing to “bullish,” but have not yet turned the corner. In short, we need more Thursdays.

Today’s Trading Landscape

Earnings to be reported include: A.H. Belo Corp., Advanced Semiconductor Engineering, Allete, Alliant Energy, Ameren Corp., Aon Corp., Apartment Investment & Management, Arch Coal, Bank of Smithtown, Barnes Group, Berry Petroleum Co., BioScrip, Calgon Carbon Corp., Calpine Corp., Chevron, China Petroleum & Chemical, CMS Energy Corp., CNA Surety, Commercial Metals Co., Constellation Energy Group, Coventry Health Care, Cummins, Digimarc Corp., Dominion Resources, Domtar Corp., Dorman Products, Eldorado Gold Corp., Energy Future Holdings, Enersys, Entertainment Distribution Co., Gartner, Graham, HMS Holdings Corp., Icici Bank Ltd, Interline Brands, iStar Financial, ITT, Kyocera Corp., Ladish, Lance, Lincoln Electric Holdings, Macatawa Bank Corp., Magellan Health Services, Mahanagar Telephone Nigam Ltd, Makita Corp., MDC Holdings, MDU Resources, MoneyGram International, Nicor, NiSource, NTT DoCoMo, NYSE Euronext, OGE Energy, OneBeacon Insurance Group, Oppenheimer Holdings, Panasonic Corp., Penske Automotive Group, Progress Energy, Quality Systems, RBC Bearings, Regency Centers, Ruth’s Hospitality Group, Sanofi-Aventis, Simon Property Group, Sony Corp., TECO Energy, The Estee Lauder Companies, The Washington Post Co., Tree.com, UIL Holdings Corp., UltraPetroleum Corp., and Weyerhaeuser Co.

Economic reports due: personal income (the consensus expects 0%) and outlays (the consensus expects -0.5%), Employment Cost Index (the consensus expects 0.5%), Chicago PMI (the consensus expects 48.5), and consumer sentiment (the consensus expects 70).

Late news: Duke Energy (DUK) reported Q3 EPS of 40 cents versus a 38-cent estimate.  

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