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By Lawrence G. McMillan

The strong rally in the Standard & Poor’s 500 Index that has taken place in the last week is certainly noteworthy. The index is up from roughly 1070 to 1220 in six trading days. That is a pace that is almost unheard of.

Intraday corrections have been miniscule — 10 points at most. In some ways, this is pretty much the same thing that the S&P 500 (SPX) has been doing since the breakdown in late July: move from one end of the trading range to other, and doing it rapidly. In addition, SPX closed above its 50-day moving average, and VIX closed below its 50-day moving average. The 50-day is often significant in that institutions use it as a gauge of whether the market is in a bull or bear trend.

SPX and VIX are on the verge of breakouts. For SPX, that means it’s up against the 1220 level, and for VIX it’s down to the 30 level. Pushing through either barrier would be further bullish fuel for stocks – although one wonders just how long this can go without a meaningful pullback of some sort. In fact, it’s the fourth time both have encountered these levels, and they have been unable to break through each of the previous times

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