The major averages rallied on Monday ahead of Apple Inc's (AAPL +0.96%) earnings announcement. Monday marked the 22-year anniversary of the October 1987 crash. Volume was lighter than the prior session on the NYSE and the Nasdaq exchange, which was expected since Friday was an options expiration day. Advancers led decliners by almost a 3-to-1 ratio on the NYSE and by almost a 2-to-1 ratio on the Nasdaq exchange. There were 50 high-ranked companies from the CANSLIM.net Leaders List, making a new 52-week high and appearing on the CANSLIM.net BreakOuts Page, up sharply from the 27 issues that appeared on the prior session. New 52-week highs substantially outnumbered new 52-week lows on both major exchanges.

The major averages jumped to a one-year high on better-than-expected earnings and a healthier outlook for the major averages. The US dollar continued to fall which helped send stocks and a basket of commodities higher on Monday. Analysts believe that earnings will exceed analysts’ third-quarter estimates which is believed to help extend the latest market rally. This will be a very busy week on the earnings front. The latest data shows that approximately 130 companies in the S&P 500 are scheduled to report this week. The average analyst believes that profits will rebound +65% in the last three months of the year after falling for nine straight quarters which is the longest streak since the Great Depression.

It was encouraging to see stocks rally after confidence among US homebuilders unexpectedly fell in October, and concerns are spreading that home sales will fall after government credits expire. The National Association of Home Builders/Wells Fargo confidence index fell -18% a reading of 19 in September which was the highest in more than a year, the Washington-based association said. Any reading below 50 suggests respondents view conditions as poor. So far the S&P 500 has rallied nearly +60% from its 12-year low in early March 2009. 

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Commodity-linked groups added to their solid gains from the prior week and posted gains on Monday as the Gold & Silver Index ($XAU +0.88%), Integrated Oil Index ($XOI +1.08%), and Oil Services Index ($OSX +1.57%) rallied. The tech sector also had a widely positive bias as the Semiconductor Index ($SOX +1.48%), Networking Index ($NWX +1.28%), and Internet Index ($IIX +1.26%) posted gains.  However, the Biotechnology Index ($BTK -0.03%) ended essentially flat even while the Healthcare Index ($HMO +0.71%) rose.  The Retail Index ($RLX +1.12%) was also positive influence on the major averages, meanwhile, financial shares were mixed as the Broker/Dealer Index ($XBD +1.10%) rose but the Bank Index ($BKX -0.51%) suffered a small loss.

Charts courtesy www.stockcharts.com

PICTURED: The Integrated Oil Index ($XOI +1.08%) posted an 11th consecutive gain, steadily rallying to new 2009 highs after bouncing at its 50-day moving average line at the start of October.

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