Stocks finished up sharply Friday on moderate volume, posting four consecutive weeks of gains, as traders revived an atypical September rally. Key S&P sectors were all higher, led by industrials, consumer discretionary and financials. Treasuries declined and the U.S. dollar index fell to an almost eight-month low, as demand for American capital equipment rose and silver rallied to a 30-year high.

The Dow Jones Industrial Average ended up 197.84 points, or 1.86%, to close at 10,860. The S&P 500 gained 23.83 points, or 2.12%, to close at 1148, and the Nasdaq was up 54.14 points, or 2.33%, to finish at 2381. Gold futures for December delivery hit a record $1,301.60 during the session, as expectations grew that QE2 may lead to increased volatility in the currency markets. Silver also reached its strongest level in 30 years at $21.45 an ounce.

Volatility trended lower as stocks moved higher. The CBOE Volatility IndexI:VIX closed down $2.13, at $21.74. Put volume of 37,000 compared to call volume of 76,000. October 20 puts closed at $0.25, suggesting traders are not expecting the VIX to trade below $20.00.

The SPDR S&P 500 ETF (SPY) - Get Report closed up $2.32, at $114.82, near an important psychological resistance level of $115.00, a level it has not seen since May 18. Put volume of 1.19 million compared to call volume of 839,000. October put option implied volatility of 18 is below its four-month average of 25. Traders purchased 29,000 October 120 calls at low volatility levels of 14 and sold November 121 calls at a volatility of 16, indicating they expect a tighter near-term trading range.

PowerShares QQQ Trust (QQQQ) put volume of 322,000 compared to call volume of 210,000, as the Qs ended the day up $0.99, at $49.66. QQQQ October put option implied volatility is at 19, November is at 23 and December is at 25, versus its three-month average of 26. QQQQ October 51 calls, approximately 2% out-of-the-money, were active on the assumption the Q's can continue to rally through a psychological support of $50.00 and trade through $51.00.

The calendar remains pretty quiet next week, with the next two really big events not starting until mid October: Q3 earnings season and the November 2 elections. Economic data expected to be released the week of September 27 include: Monday: No Economic Data; Tuesday: ICSC-Goldman Store Sales at 7:45 a.m. EDT, Redbook at 8:55 a.m. EDT, S&P Case-Shiller HPI at 9:00 a.m. EDT, Consumer Confidence and State Street Investor Confidence Index 10:00 a.m. EDT; Wednesday: MBA Purchase Applications at 7:00 a.m. EDT, EIA Petroleum Status Report 10:30 a.m. EDT, Farm Prices at 3:00 p.m. EDT; Thursday: GDP at 8:30 a.m. EDT, Jobless Claims, Corporate Profits at 8:30 a.m. EDT, Chicago PMI at 9:45am and EIA Natural Gas Report at 10:30 a.m. EDT; Friday: Motor Vehicle Sales, Personal Income and Outlays 8:30 a.m. EDT, Consumer Sentiment at 9:55 a.m. EDT, ISM Manufacturing Index and Construction Spending at 10:00 a.m. EDT.

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