And there were several fundamental data points that provided a foundation for the Dow's advance:

1) Confirmation that Saudi Arabia will increase its daily oil production to 9 million barrels per day. That helped take pressure off oil prices, with many traders now confident that there will be adequate oil supplies for the Northern Hemisphere winter. Oil Friday closed down $2.30 to $88.71. Even better, some traders believe oil prices may be headed back down toward $80 per barrel - - hardly a low price, in historical terms - - but a decidedly more-pleasant reality for the economy than oil at $100 per barrel, economists agree.

2) A speech by U.S. Federal Reserve Chairman Ben Bernanke in which the Fed chair said the Fed needed to be "exceptionally alert and flexible" as the economic outlook became more uncertain, Bloomberg News reported. That convinced economists, analysts, and traders that the Fed will again lower key short-term interest rates when it meets December 11. Equally significant, it sent a signal that the Fed has not gone away: that the Fed remains at the ready to help stimulate U.S. economic growth, if required.

3) U.S. Treasury Secretary Henry Paulson's meeting with major private bank executives at which they apparently moved closer to a plan to prevent thousands of Americans from losing their homes, as subprime mortgage interest rates reset. Economists and analysts are now reasonably confident there will be some type of federal or joint federal/private package in the next few months to prevent hundreds of thousand of at-risk subprime loans from going into default. That package, if approved, will not end the housing slump, but it will begin to stop the default-to-housing-price-decline spiral that is hampering the sector's recovery.

Market Analysis: As noted, three consecutive closes above the 200-day moving average does not guarantee that the selling is finished or that the rally will continue. But if the Dow remains above the average that would indicate that institutions are adding money to the market, which is the first step in a rally, and is also a signal by those institutions that they believe better times are ahead for the U.S. economy.