9:00am (EST)

The market rallied on Tuesday as the bulls took one step closer to a breakout after clearing another layer of resistance and the 50-day moving averages.  There is an old saying on Wall Street that you can’t fight the Fed and the recent rally is a result of throwing more “good” money on top of bad debt not only in the U.S. but around the globe as well. 

The Dow surged 95 points, or 0.8%, to close at 12,837.  The blue-chips traded to a high of 12,898 and easily cleared the 12,800 level.  The next level and possible trend change will come at 13,000.

The S&P 500 added 13 points, or 1%, to finish at 1,357.98.  The index traded to a high of 1,363 and was able to clear 1,350 on the close which has been a brick wall since May’s swoon.  A move above 1,375 could be good for another 2% push to 1,400 if the bulls can carry the momentum all week.

The Nasdaq jumped 34 points, or 1.2%, to settle at 2,929.  Tech kissed a high of 2,940 and looks poised for a run at 3,000 which would also represent a possible trend change. 

The Russell 2000 gained 14 points, or 1.8%, to end at 786.  The small-caps reached a peak of 789 and will look to clear 800 on a continued rally.  The S&P Volatility Index ($VIX, 18.40, up 0.08) traded down to 17.36 but finished higher for the session.  A close BELOW 17.50 would be bullish.

The Fed will announce the meeting minutes at 12:30pm this afternoon and Ben Bernanke will follow-up with his two cents.  The bulls are expecting good news and a possible extension of “Operation Twist” while the bears hope they sit on their hands and do nothing. 

We have said the Fed has little ammo left and we believe there’s a real good chance they disappoint investors.  The scenarios we gave you on Monday are still in play for a lower market and we said a few weeks ago the market could rally to resistance.

Thursday will also be a big day for news as jobless claims and the Philly Fed numbers will be released.  Given the current environment, we are expecting another volatile day but we should get a clearer picture on how things shake out over the next few days. 

Futures are showing a slightly higher start to today’s session and look like this:  Dow (+13); S&P 500 (+2), Nasdaq 100 (+6).