Merger activity provides incentive for the bulls to end three-session losing strike. The Dow ($INDU) gained 124.17 points to a level of 9,789.36. The S&P 500 ($SPX) added 18.60 points to 1,062.98. The Nasdaq ($COMPQ) tacked on 39.82 points to 2,130.74. Volumes were light on the session with the NYSE trading 979 million shares and the Naz turning over 1.91 billion shares. Market breadth was positive by a 24-to-6 and 20-to-7 margin on the Big Board and Naz respectively.

Merger activity was heavy Monday and this is viewed as a positive. Merger activity shows faith in the future corporate America. This being the case, a couple major announcements Monday helped the major market indices erase a three day losing streak. However, volumes were light and we could see sideways trading ahead of the employment report on Friday.

Xerox (XRX) shares fell 14.86 percent Monday, but the company provided a bullish atmosphere. XRX announced that it would buy Affiliated Computer Services (ACS) in a deal valued at $6.4 billion. As of Friday's close for XRX at $9.02, the deal values ACS shares at $63.11. However, the deal consists of 4.935 shares plus $18.60 in cash for each ACS share. ACS shares rallied 13.99 percent on the session to close at $53.86.

Abbott Labs (ABT) was also in the news when the drug company agreed to buy the drug unit of Belgian company Solvay for $6.6 billion. ABT hopes this will help provide some strength to its prescription drug business, which has been struggling of late. ABT shares gained 2.64 percent on the session to close at $48.58. GenTek (GETI) shares rallied 39.87 percent to $37.76 after American Securities announced it would buy the company for $38.

Shares of Apple (AAPL) saw strength Monday, rising 2.07 percent to a price of $186.15. The iPhone maker announced that this product will be available in China starting in October for $730. Later in the year it is expected to make its debut in France. Apple shares are trading near a 52-week high, which sits at $188.90.

To the downside we see Research in Motion (RIMM), which fell 3.58 percent Monday. The stock has been on a solid decline since announcing disappointing earnings last week. On Wednesday last week, RIMM shares closed at $85.77, but the stock closed Monday's session at $66.44.

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