Stock indexes scored solid gains on heavy volume as traders returned to Wall Street after summer vacations. The day started out with modest gains, which quickly turned into losses after a stronger than expected August ISM manufacturing number was reported 30 minutes into the session. The dip was shallow and short-lived and the indexes rebounded in two waves and were near their best levels of the day by early afternoon. When influential tech analyst Dan Niles made some positive comments about IBM around two hours before the close it caused a near buying panic into the final bell.

The Nasdaq advanced by 31.03 points, and with its gain of 1.71 percent, was the day's best performer. It closed at a 17-month high. The S&P 500 finally broke through resistance and finished 13.98 points, or 1.39 percent, higher. The Dow powered to a 14-month high when it rose by 107.45 points. Its gain of 1.14 percent, while the smallest of the day, was still respectable.

The internals couldn't have been better, with breath and volume readings exactly where you'd want to see them on a day like this. NYSE winners outnumbered losers 2,380 to 908, while Nasdaq advancers topped decliners 2,249 to 998. Volume was on the low side, but picked up noticeably during the late ramp up in stocks. NYSE trade expanded by 53 percent to 1.44 billion shares, in what was the busiest session in almost a month. Nasdaq volume climbed by 46 percent to 1.77 billion shares. Up volume was 5.10 times heavier than down volume on the NYSE and 3.63 times heavier on the Nasdaq. The number of new highs jumped by 300 to 838, while new lows grew by two to 12.

As Wall Street racks up days like this, it continues to feel more and more like a new secular (long-term) bull market is unfolding. Technically, a cyclical (short-term) bull market occurs any time one or more of the major indexes climbs by at least 20 percent. They can occur within the framework of a long-term bear market, as traders bid up stocks in anticipation of a turn around in the economy. But until there is an actual pick-up in business, most of those cyclical bull markets end up running out of gas quickly.

The Nasdaq Composite made its primary low for the bear market at 1,108.49 on October 10 of last year and has climbed by 66 percent since then. With quality stocks breaking out and new highs swamping new lows, there is no reason to believe that this run is over. We plan to continue to trade it as bulls, with one or two bullishly-biased straddles or strangles thrown in. If the indexes start to sell off on rising volume, we will quickly become more defensive. One or two ugly days can be weathered during strong bullish periods like this, but if there were three or four over a pretty short period of time, it would be a sign that the big players were heading for the exits.

The Chinese Internet stocks look interesting again after the explosive gains racked up today by the three star players, NTES, SINA and SOHU. The leader, NTES, shot up by 6.30 points to a new all-time high at 57.30 today. SOHU rose by 4.55 points, or 15.21 percent, to 34.47 during the wild outing. The most interesting chart among the three belongs to SINA, which advanced by 3.26 points to 34.47. 

Today's move in SINA occurred after it had consolidated near 30 for around three weeks, with the last few days spent inside a tight range on contracting volume. Many stocks have exploded higher out of a chart pattern like that during bullish market periods in the past. We opened a long strangle late today by purchasing some of SINA's December 35 calls and an equal number of its December 30 puts. We are not going to officially track this one as a pick, but we will comment on it from time to time if the stock makes some large moves. If it settles down into a trading range again, we'll sell both sides of the strangle at a small loss within a couple of weeks.

As long as the market remains healthy, we would still like several of our recent picks for new money. We purchased calls in Vital Images (VTAL) today for that company's October earnings. The stock opened higher, but then pulled back and spent most of the middle part of the session trading fractionally lower. It settled 7 cents higher at 23.10. This is one of those high relative strength stocks that has been in favor during the rally and, despite its poor performance today, we like it here for new money.

Yahoo (YHOO) also remains attractive for new money after it climbed by 0.80 to 34.19 today. Volume picked up by 68 percent to 13.6 million shares, in what was the busiest session in two weeks. YHOO will report earnings on October 8. With a combination of high fundamental and technical rankings, it could make additional gains before that event if the market cooperates.

Comtech Telecommunications (CMTL) shot up by better than 2 points to a new high at 26.50 in the opening minutes on brisk trade. It appeared to be set up for a strong advance, but there was no follow-through after the initial impulse. CMTL did hang on to finish 1.54 points higher at 25.85 on volume that was 45 percent heavier than average. The stock has done quite well since management raised guidance on Tuesday of last week and we think that it can make more progress between now and earnings in late September. If it bounces tomorrow and the bid on the calls reaches the target price, we would want to sell half of them to lock in a free trade.

American Pharmaceutical Partners (APPX) will split 3-for-2 after the market closes tonight. It recouped half of Friday's loss when it rose by 1.67 points to 49.34. We took profits on the trade today as planned.

We're glad that we elected to hang on to the remaining calls in j2 Global Communications (JCOM) after that company split its stock 2-for-1 over the long weekend. Traders couldn't seem to get enough of JCOM today at its new adjusted price. They gapped it open to the upside and then chased it throughout the session. It settled 6.98 points, or 22.34 percent, higher at 38.23. That works out to a pre-split gain of almost 14 points, something that you rarely see any more. We are looking to take the rest of our profits here.