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Trump Vow On Drug Prices Fails To Stop Rally; Apple Retakes Prior Buy Point

Drug stocks fell hard in the wake of a pledge by President-elect Trump to hold down medicine costs, but steel, airline and other cyclicals rallied Tuesday. (iStockphoto)

Stocks are rallying sharply and the Dow Jones industrials are leading the way, surging 1.3% in late afternoon trading on Wednesday.

The Nasdaq composite had lagged after President-elect Donald Trump's vow to hold drug prices down boosted skittishness among biotech and ethical-drug investors, but has now quickly joined the broad market advance.

Meanwhile, Apple (AAPL) helped lead a big flurry of gainers within the Dow Jones industrials; as of 2:30pm in New York, at least 17 of the Dow 30 components rose 1 point or more.

Apple rose nearly 0.8% to 110.78, getting back above a 110.33 original buy point in a long bottoming base pattern. It's been nearly three months since Apple's Sept. 14 breakout took shares above that proper entry within a cup with handle en route to a nearly 8% gain, so some would argue that that buy point is irrelevant.

However, a continued rise past 110.33 and a rebound back above its slightly downward sloping 50-day moving average would go a long way in helping the former tech leader complete a new base and potentially break out again.

Watch for potential new breakouts by fellow large caps, including IBM (IBM) (164.76 cup with handle buy point) and AutoZone (AZO) (809.88 entry in a new double bottom with handle).

Amgen (AMGN) dropped 3%, hitting its lowest price levels in more than three weeks. Former big winner Biogen (BIIB) slid 2.1% and briefly fell below the ever important 200-day moving average.

Yet the sell-off in biotech and ethical drug firms is failing to hamper the Nasdaq composite as the tech-rich index has rebounded into a solid gain of 0.9% with just more than an hour left in the trading session.

The NYSE composite is now just slightly ahead, rising almost 1%. The Russell 2000 is up nearly 0.7%.

Perhaps helping buoy the U.S. equities market is a strong finish for European equities even after Italy voted a resounding no on former Prime Minister Matteo Renzi's proposal to enact structural reforms by bypassing the country's Senate. The German DAX 100 soared 2%, London's FTSE 100 gained 1.8%, and the French CAC 40 advanced 1.4%.

Volume has accelerated and is running sharply higher so far on both the Nasdaq and the NYSE vs. the same time on Tuesday.

In the U.S. stock market today, top industry-group gainers included steel alloys, consumer-electronics retailing, solar, airlines, agricultural chemicals and chip equipment, all up well more than 1%.

In the airline space, Spirit Airlines (SAVE) has done well since clearing a 49.84 handle buy point within a long, deep, bottoming base structure. The stock, up more than 2% for the week, has gained 16% since its Nov. 10 breakout, two days after the historic U.S. elections.

The handle in Spirit is derived by adding 10 cents to the handle's intraday high of 49.74, set on Oct. 25.

Notice how on a daily chart the handle showed tight, downward-slanting price action in mostly dull volume, the right way for a handle to form.

Alaska Air (ALK) — fresh from gaining government approval, with conditions, to acquire rival airline Virgin America — gained 1.7% to 86.20. The stock has seen nice up days in heavy volume in recent weeks and has now surpassed an 83.36 double-bottom buy point.

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