Before the Open (Oct 6)

Good morning. Happy Wednesday.
The world is green. Every index in Asian/Pacific closed up including several 1% winners. Every index in Europe is up – several 1% winners there too. Futures here in the States point towards a flat open for the cash market.
Two weeks of consolidation led half the market participants to believe a top was in place and a significant pullback in the works. The other half (me included) expected the intermediate term up trend to remain in place but perhaps a little weakness in the near term. The market surprised both groups by gapping up and rallying hard yesterday on strong volume. The market corrected with time, not price.
I reiterate my belief the market will test its April highs this winter, and after yesterday’s strong day, it may be sooner rather than later. The S&P high was ~ 1220. That’s only 60 points above the current price. But let’s not get too giddy about the possibilities.
In my opinion there are two key drivers to the market movement right now: bonds and the US dollar.
When money comes out of bonds, the market rallies. Here’s a chart which relates the two.

And when the dollar drops, the market rallies. Here’s a chart.

I’ll be watching both bonds and the dollar to confirm yesterday’s breakout.
I posted a handful of long set ups on the Message Board last night. More after the open.
headlines at Yahoo Finance
today’s upgrades/downgrades
this week’s Earnings Reports
this week’s Economic Numbers