We came into the week expecting a push to the top of the current trading range and the run higher on Tuesday has the bulls back on the verge of a breakout. There have been a lot of Debbie Downers calling for a market pullback for a month now but the charts have been bullish and last week’s pullback was mild. It just didn’t feel that way because the back half of the week was negative and the tone was bearish with Apple (AAPL, $533.90, up $15.07) folding like a cheap lawn chair.
Those fears have quickly vanished as the 2-day rally has been the strongest in months. We mentioned a few weeks ago if the bulls can clear and hold this next wave, or second layer, they could be off to the races. Many of the slick-talking pros are now anticipating a pullback if a Fiscal Cliff deal gets done, or if one doesn’t get done. This is called flip-flopping and why we let the charts do all of the work.
The Dow gained 115 points, or 0.9%, to close at 13,350. The blue-chips traded to a high of 13,365 and closed right on our second wave target. You can’t call it mush better than that, folks. The next level of resistance comes in at 13,500-13,600. Support has moved up to 13,200. (continued…)
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