Bulls continue to control trading with economic and merger news allowing further buying. Traders were pleased Thursday to hear Fed Chairman Bernanke basically calling an end to the recession, although he did say a recovery will be slow. The gains for stocks, with the major market indices looking to make it eight gains in the past nine sessions, has been methodical, but with very little pressure from the bears. Economic data on industrial production and consumer prices has been the focus, although a merger announcement from Adobe (ADBE) has also gotten attention.

Industrial production in August rose 0.8 percent, a tenth better than estimates. This is the second straight month of gains following a streak of eight consecutive declines. The recession definitely seems to have ended for the manufacturing sector with most region reports showing expansion as well. The year on year rate remains negative, but has turned the corner and is showing improvement. Industrial stocks saw strong gains on Tuesday led by Caterpillar (CAT) and this stock is seeing gains again Wednesday, up 1.5 percent to $52.50 a share.

Consumer prices, unlike producer prices, matched expectations in August, rising 0.4 percent overall and 0.1 percent at the core. Year on year, the CPI is down 1.4 percent with the core rate up 1.5 percent. The headline figure was lifted by energy prices, which rose 4.6 percent during the month. However, the rebates for new cards thanks to the "cash for clunkers" program brought down prices for new cars. This data leaves the Fed with flexibility in when to unwind its balance sheet expansion.

In merger news, Adobe announced it will purchase Omniture (OMTR) for $1.8 billion. ADBE announced the news along with its earnings report, which showed the company beating earnings estimates by a penny a share. However, ADBE saw profits and revenues fall, which led the company to purchase the fast growing Omniture. OMTR shares are up nearly 25 percent on the news at a price near $21.60. ADBE shares are down about 5 percent, trading near $33.75.

The semiconductor sector could see strength Wednesday following positive comments from Rambus (RMBS). The chip maker raised its revenue forecast for the third quarter thanks to stronger chip demand. RMBS shares are up nearly four percent in early trading at $18.75. RMBS has seen huge gains since hitting a low of $4.95 back in November.

Overall, the bulls just won't ease their grip on the market, yet euphoria has not set in and this has led stocks to climb a wall of worry. The S&P 500 SPDR (SPY) is moving through resistance near 105-106 and this would be another positive for the bulls.

Jody Osborne
Senior Staff Writer & Options Strategist
Optionetics.com ~ Your Options Education Site