Market Talk

US stocks close higher once again as materials get a boost from the weaker dollar. Investors also feast on continued hopes for additional Fed stimulus.

DJIA closes up 31 (0.3%) at 11164, extending its three-week gain. S&P 500 gains 3 (0.2%) at 1186 and Nasdaq Composite rises 11 (0.5%) to 2491, its 11th gain in the last 13 sessions. Materials, consumer discretionary lead the gains, but financials slip amid continued foreclosure worries.

Dow rose as much 115 early in the session, but the gains slipped, perhaps on worries that the market has run-up too much, too fast. DJIA up 3.7% in October, 11% since end of August.

US dollar index slips 0.5% to 77.07. Gold and crude oil rise.

Today’s “Technically Speaking” column looks at the VIX, otherwise known as the stock market’s fear index, and ponders whether investors are becoming complacent amid the big market run-up.

VIX remains at low levels – last time it was below 20 was in April, when the market had a big rally and then experienced a 16% drop. Not saying history will repeat itself, but it bears watching. Caution is prudent, especially as the bullish chatter is getting louder and louder.

From Tech Speak:

Complacency may be the biggest danger to the surging stock market.

As stocks have spiked over the past two months, the Chicago Board of Options Exchange Volatility index—also known as the market’s “fear gauge”—has dropped to levels not seen since the spring, suggesting complacency could be setting in among investors. The index fell below 20 last week for the first time since early May.

Low levels of fear could signal a peak of the stock market is approaching.

The Dow Jones Industrial Average is up 12% since the end of August, while the broader Standard & Poor’s 500-stock index has gained 14%. Investors have piled into stocks amid a better-than-expected earnings season and ahead of several key events, including a first estimate for third-quarter gross domestic product, the midterm elections and the Federal Reserve meeting in November, where the central bank is expected to provide additional stimulus measures to boost the economy.

The VIX sank below 20 two weeks ago for the first time since May 3, days before the so-called flash crash. The closely watched volatility index tracks prices investors are willing to pay for options on the S&P 500. It tends to jump when stocks decline and fall when stocks rise.

When the VIX hit a 52-week low of 15.23 in late April, the S&P 500 was in the midst of topping out. The S&P 500 then began a 16% slide through early July.

But Dan Greenhaus, chief economic strategist at Miller Tabak & Co., cautioned that a VIX below 20 doesn’t mean a pullback in stocks is imminent. “This indicator is not statistically significant in suggesting an impending downturn,” Mr. Greenhaus said in a note to clients. It is “a warning sign” that investors should consider, he added, especially as the market has had such a quick run-up in a relatively short time…

As anybody who downloads Katy Perry videos to their iPad know, the mobile Internet is hot.

Today’s Upshot looks at the companies that are involved in the mobile Internet, from the chip makers, to the parts suppliers, to Apple and AT&T. What’s interesting about the column, though, is that originally we were going to do this piece just looking at the companies that had the biggest sales growth, and try and suss out what the trends were.

Well, the trend turned out to be the mobile web. Apart from a few outliers, companies like Stanley Black & Decker, which grew through a merger, and Caterpillar, the vast majority of companies showing big sales growth, 30%, 40%, 80%, were all tech companies related somehow to mobile web. This is a sector that is just growing explosively.

It’s not likely to go cold, either.

If there’s one group of companies that isn’t tied down by the slack economy, it’s those that supply the wiring, chips, and services related to mobile Internet.

The “explosive demand” for broadband, as Xilinx Inc. Chief Executive Moshe Gavrielov puts it, is fueling sales of memory, communications and ancillary chips—and the gadgets that use them.

“Growth for us continues to be driven by the phenomenal rise of the mobile Internet and social network,” said Eli Harari, chief executive of SanDisk Corp., whose sales rose 32% in the third quarter. That’s a trend he expects to remain in place, meaning SanDisk and other chip makers can continue to see material growth even while economies in the developed countries struggle.

To illustrate SanDisk’s recovery, Mr. Harari pointed out that the company’s cumulative operating profit over the past six quarters is more than two and a half times the cumulative loss it posted in the six preceding quarters.

The G-20 gathering does nothing to disturb the US dollar’s downtrend, as finance ministers issue a typically vague pronouncement to avoid competitive currency devaluation. File this under “watch what they do, not what they say,” folks.

By now, everyone should know the drill — USD down sharply, stocks, gold, oil and a host of other commodity prices run higher. September existing home sales due at 10:00 a.m. ET; Dallas Fed’s October manufacturing outlook survey due at 10:30 a.m. Texas Instruments reports 3Q results after the close.

US dollar index recently down 0.8% at 76.87, euro at $1.4036. S&P futures up 7.50; Dow futures up 59. Ten-year note also higher, yield at 2.53%.