9:00am (EST)

Good earnings, China, and the Fed’s backing are a powerful recipe… 

On Wednesday, the Dow gained 76 points, or 0.7%, to close at 11,096.  The index traded to a high of 11,155 and we said 11,150 would come into play on a push towards 11,200 if the rally continued.   Two of the Dow’s declining stocks, JPMorgan (JPM, $39.84, down $0.56) and Intel (INTC, $19.24, down $0.53), had great earnings reports but failed to hold onto their gains.

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The S&P 500 broke MAJOR resistance and we said we were looking for a break above 1,170-1,175 as the index added 8 points to settle at 1,178.  If the momentum continues, the index is easily on track to break the 1,200 level and traded to a high of 1,184.     

The Nasdaq once again led the way as it popped 23 points, or 1%, to finish at 2,441.  Tech traded to a high of 2,452 which was right on cue with our target of 2,450-2,500. 

Since we are on the subject…

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The all-time high for the Nasdaq is 5,132 which was hit on March 10, 2000 and closed at 5,046 and 5,048 on consecutive days at the peak.  Talk about a quick “double top”.  It was all downhill from there of course and here we are 10 years later. 

The most amazing thing about the Tom Petty freefall was the fact the index fell a stunning 80% over the next 2 years.  Yep, after its peak, the Nasdaq tanked to a low of 1,109 on October 8, 2002 and 1,108 two days later.  Talk about a fast “double bottom”.

History is often a good indicator in a lot of forecasts along with charts and if we had to make a prediction, it looks like Tech (Nasdaq) could test 2,600 before another ferocious battle takes place – –  if the bulls continue to blow off more steam a decade later.

At any rate, at least you got a free history lesson today on the highs and lows of the Nasdaq.

There are a number of economic reports hitting the wire as we go to press and we will update the economic news in our 1pm update.

Keep an eye on Apollo Group (APOL, $49.50, down $0.48) this morning.  The company reported earnings after the bell last night and many of our long-term subscribers know we have been calling for a massive breakdown in this stock. 

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We have chronicled the company’s shady business practices over the past few years and have traded this one in the past.  All of our option trades on Apollo have been put options and we wished we would have bought some cheap, “out-of-the-money” October or November put options on this one before the market closed yesterday.

The company beat Wall Street’s expectations but did not offer guidance going forward as its “predatory” lending practices could be curbed by new regulations.  Finally, the company is started to come clean.

As we head to press, Dow futures are higher by 10 points to 11,054; the S&P 500 futures are up 2 points to 1,176; and the Nasdaq 100 futures are showing a gain of 3 points to 2,059.

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