FALLING DOLLAR GIVES COMMODITIES BIG BOOST -- BOUNCE IN FINANCIALS HELPS MARKET -- BREAKOUTS IN CISCO AND INTEL LEAD NASDAQ HIGHER

SILVER HITS NEW HIGH ... Another record low in the U.S. Dollar helped commodity markets to another big day on the upside. Oil jumped $2.72 to close near $97 and just three dollars shy of its 1980 high near $100 in inflation-adjusted dollars. Gold jumped $12 to close at $823, which brings it close to its 1980 peak near $850. Most other commodities jumped as well with the Reuters/Jefferies CRB Index ending at another 52-week high. That made gold and silver stocks market leaders. Chart 1 shows the Gold & Silver (XAU) Index rising 3.5% to another record high. Silver had an especially strong day with a gain of 5%. Chart 2 shows the Silver iShares (SLV) closing over its 2006 high for the first time this year. Basic material stocks were market leaders as well. What also helped the overall market close higher today was a bounce in financial stocks.

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FINANCIALS FINALLY BOUNCE ... Financial stocks bounced for the first time since last Wednesday. Chart 2 shows the Financial SPDR (XLF) still in a chart downtrend. Although upside volume wasn't that impressive, today's financial bounce relieved some selling pressure on the entire market. That came at a good time for many of the major market indexes.

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MARKET INDEXES BOUNCE OFF OCTOBER LOW ... Last week, we showed the Dow and the S&P 500 testing initial chart support along their early September peaks. They retested those lows again yesterday. That's why today's bounce off those lows is encouraging because it kept the August/October uptrend intact. Chart 5 also shows the S&P 500 stabilizing just above its 200-day moving average. Advancers beat gainers by a 20 to 12 margin on the big board and volume was respectable. A continuation of today's rally probably depends on a continuing bounce in financials.

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CISCO AND INTEL LEAD NASDAQ HIGHER... Chart 6 shows the Nasdaq Composite Index gaining a percent today on rising volume. It remains the strongest of the major indexes. It got a help from a number of large technology stocks that are pulling it higher. Two standouts today were Cisco (Chart 8) and Intel (Chart 9). Both hit new 52-week highs.

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