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Bulls Clear Resistance, Prior Support

The whipsaw action on Thursday caught a lot of traders off guard as many on Wall Street saw a resolution to the government crisis lasting into next week's deadline date of October 17 to raise the debt ceiling. The Republicans threw the Head Zombie a bone that he chewed on into the night as no resolution was reached before the market closed. The bulls didn't care because they felt a deal was imminent as they recovered a couple layers of support following the steep pullback earlier this week.

The Dow jumped 323 points, or 2.2%, to close at 15,126. The blue-chips traded to a high of 15,126 and easily cleared 14,800 and 15,000 on the rebound. The close above 15,100 was bullish but the bulls need to clear 15,200 today to keep the momentum going into next week. Support will try to hold at 15,000 on a pullback.

The S&P 500 surged 36 points, or 2.2%, to settle at 1,692. The index opened at 1,660 and made a run at 1,675 by ending at its high but failed to clear this level into the close. If the bulls can clear this level by the weekend there could be another run at 1,700 next week. A close below 1,650 would signal further downside risk to 1,625-1,600.

The Nasdaq zoomed 83 points, or 2.3%, to close at 3,760. Tech easily cleared the 3,700 level following the open at 3,721 and held 3,750 by the bell. The high checked-in at 3,764 and a finish above 3,775 keeps 3,800-3,825 in play. Another close below 3,750 and more importantly, 3,700 would be bearish.

The Russell 2000 advanced 26 points, or 2.5%, to end at 1,069.50. The small-caps showed the most strength after opening at 1,052 and clearing 1,050 and then 1,060 while also finishing near session highs. The bulls will be gunning for 1,075 today while the bears will try to crack 1,060-1,050 again.

The S&P 500 Volatility Index ($VIX, 16.48, down 3.12) sank 16% and fell back below 20 and 17.50. The bulls need to get the VIX back below 15 to keep their momentum while the bears are hoping for a repeat and close back above 17.50 (or 20).

Futures are showing a slightly higher open as we head to press: Dow (+11); S&P 500 (+1); Nasdaq 100 (+4).