12:45pm (EST)

The bulls are beating up the bears today but there is love in D.C. as Democrats and Republicans have extended the Bush-era tax cuts which have helped lift the market to new annual highs.  The Bush tax cuts have been extended to everyone for two years, payroll taxes have been cut for one year from 6.4% to 4.2%, AND unemployment benefits have been extended for 13 months.  The news still has to be signed off on but will cost us $900 billion.  Imagine that.

The news has been a relief and we said in our Weekly Wrap it would be the next catalyst that the bulls would be banking on to push the market through resistance.  Bingo.

The Dow has broken above our first target of 11,400 and is currently up 45 points to 10,408.  There is slight resistance in the 11,450 area but we are expecting a run up to 11,600-11,700. 

The S&P was trapped in our 1,220-1,225 range for a few days and is showing an advance of 7 points to 1,230.  This was the number we outlined this morning and we would like to see a close above it for confirmation of a run to 1,250.

The Nasdaq is higher by 16 points to 2,611.  The index traded to a high of 2,623 and we are watching for a run to 2,661.  If cleared, we will easily see 2,700 with a shot at 3,000 down the road for Tech.

As far as stocks, it’s official.

The U.S. Treasury has sold its remaining stake in Citigroup (C, $4.58, up $0.13) which gets the bank one step closer to freedom.  The sale netted $10.5 billion for taxpayers as shares were sold at $4.35.  The Boys on the Hill still own $800 million of preferred shares and warrants but this is a nice overhead cloud that is clearing for Citigroup.

Elsewhere, 3M Company (MMM, $84.47, down $2.41) is down 3% after updating Wall Street on its forecast for 2011.  The company said it expects to earn $5.90-$6.10 a share in 2011, while analysts were looking for a profit of $6.24 a share.  3M also reiterated its 2010 outlook for earnings of $5.59- $5.63 a share and said it will continue look for acquisitions to grow the businesses.

As we head into the close, we would like to see Dow 11,400 hold, while a close above 1,230 would be nice for the S&P 500. We would like to see the Nasdaq close above 2,600, naturally, but we are hoping for 2,625.

That’s all we have for the outside today.  Inside our Members Area is where all the action is.  Subscribers, check for the updates!