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Bulls Rotating As Dow Nears All-Time Highs

Bulls Rotating As Dow Nears All-Time Highs

9:00am (EST)

The bulls continued their push to the moon as the market ended higher on Tuesday following a flat Monday. Tech was a little weak but the sector rotation we are seeing in the blue-chips is a bullish sign as they remain the last index not to take out new all-time highs. But it could be coming.

The Dow jumped 111 points, or 0.7%, to end at 15,680. The blue-chips finally cleared September resistance at 15,600 and went out 3 points off their high. The 52-week peak is 15,709 and a move past this level should get 15,800-16,000 in play. International Business Machines (IBM, $182.12, up $4.77) accounted for 25 Dow points as shares bounded off their 100-day MA to gain 2.7%. Verizon (VZ, $51.09, up $0.52) and AT&T (T, $36.27, up $0.70) were also standouts in the Dow after adding 1%, and 2%, respectively, and 16 points to the index.

The S&P 500 gained 10 points, or 0.6%, to finish a shade under 1,772. The index reached an all-time high of 1,772.09 and we said a run to 1,775-1,800 would come once 1,750 cleared and held. This level is now getting stronger as near-term support while a close above 1,775 should get our upper end fluff target of 1,800 in play.

The Nasdaq added a 12-pack, or 0.3%, to close at 3,952. Although Tech wasn't as strong as the other indexes, the bulls were able to clear resistance at 3,950 after trading up to 3,957. Next stop - 4,000 - as long as support at 3,925-3,900 holds on a pullback.

The Russell 2000 popped 3 points, or 0.3%, to settle at 1,121. The small-caps kissed another all-time peak of 1,122.64 and a close above 1,125 gets 1,150 in the mix. A close back below 1,110 and then 1,100 would suggest a top is in.

The S&P 500 Volatility Index ($VIX, 13.41, up 0.10) was slightly higher on an up day which was odd but not rare. The VIX peaked at 13.63 and stayed below 13.50 by the bell but we need to footnote the action.

Side Note: The Dow Transports set another all-time high yesterday and we talked about one of the Dow Theories over the weekend. If the blue-chips can clear fresh 52-week and all-time peaks today it would be a good sign the rally has legs to run into the first week of November.

As we head to press, futures look like this: Dow (+44); S&P 500 (+4); Nasdaq 100 (+14).