On Tuesday, the market lost support at Nasdaq 2500 after losing S&P 500 1200 last week, and then threatened to breakdown below the psychologically important Dow 11,000. But alas, one bad day does not confirm a trend change, and today (Wednesday) was the exact opposite.

The market is finally giving us the long anticipated and overdue pullback. This is good for its longer term health. The media is attributing the weakness to news out of Ireland, but the fact is that the technical picture has been screaming for a pullback and retest of key support levels, including Dow 11,000.

The resolution of uncertainty last week around the elections and FOMC announcement allowed the market to release some pent-up energy and finally break out of its consolidation pattern. After the normal head fakes in both directions, it rallied hard such that the S&P 500 reached a 2-year closing high.