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Minyanville's T3 Daily Recap: Market Pares Gains After Dow Briefly Goes Positive for 2011

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The rally continued Wednesday, with an early push taking the blue chips positive for 2011 before the market faded into the close.

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The rally continued Wednesday, with an early push taking the blue chips positive for 2011 before the market faded into the close. Stocks surged sharply higher until the last hour and change, when the market pulled in to pare gains on the day. The S&P was marginally the strongest index, finishing 0.98% higher, and the Dow now sits 0.5% away from being positive on the year.

A precarious sovereign debt crisis in Europe, combined with slow growth and political fumbles in the US, triggered a sharp sell-off in late Summer that took stocks lower for the year, but it at least appears that European leaders will take steps to ensure that this crisis does not rival the last. Relief and renewed optimism has sparked a startling rally in world markets

The S&P pushed to the top end of the range at 1220-1230 today before hitting some resistance. Apple (AAPL), which had resumed its position as market leader over the past few sessions, struggled to make new highs and began pulling in, the first sign that the rally needed a rest. Traders looking for a cash flow short based on overbought conditions were rewarded with the late-day flush, and it will be interesting to see if there is more profit taking and selling tomorrow.

Healthy action right now would be for the market to rest and perhaps retrace slightly, but not enough to do any major technical damage. Consolidation above the 1195-1205 area would be make traders more comfortable about buying for the next leg higher.



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Scott Redler is short SPY, MOO, OIH and LVS. (Was short AAPL intraday, but covered the position)
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