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Stock Market S&P 500 At The Breakout.....

Stock-Markets / Stock Markets 2010 Mar 12, 2010 - 01:33 AM GMT

By: Jack_Steiman


They tried to sell this puppy but it just wouldn't sell. It would have been best to sell a few hundred points on the Dow, and we started in that direction today. but the force of this bull just wouldn't allow for it. The bears came out of the gate defending the close just under S&P 500 1151 with a nice little gap down. It started to run some after trying to claw back to flat and it seemed the selling was finally under way. Some bull markets get silly and just don't allow for too much selling before the buyers rush back in. The S&P 500 was spending most of the day trading slightly under the flat line but as things drew closer to the final bell, the S&P 500 went green and closed right at the breakout with a final print of 1150.

One single point away from confirming the rest of the important indexes already on that breakout. Indexes such as the small caps, mid caps, transports, Nasdaq, NDX and so on. There are no guarantees, but with today's action, we're a simple gap up in the morning away from having the whole market on breakout which would likely cause the shorts to start covering their positions. This would add fuel to the rally and likely allow the S&P 500 to put some distance away from 1151. Good action for the bulls today and you get the feeling they smell blood in the water. NEVER a guarantee it'll happen but the odds are increasing we see the move shortly.

Sometimes what happens to the bears is that they, in a way, give up the fight. I'll explain. The S&P 500 has used gaps and break up moves above critical exponential moving averages to get where it is now. If the bears look backwards, they can see that there's a plethora of support areas just below. All these gaps, etc make the job for the bears to break things down very difficult. They get a little disappointed and sort of throw up their hands and walk away from the dance. Just too much to overcome. The good news for the bulls is that there are enough bears still in the fight to keep this market moving higher. Above 1151 with force will start to erode the sentiment, but it'll be a slow move higher, so there's room to run. The bears know it's now or never. Will they fight some more or just walk away? We'll know sooner than later.

Powerful internals continue to move this market higher in a fashion that begets higher prices. If the market was moving up on weakening internals such as lower advance decline lines, etc, then things would be far more tenuous. This is not the case and with strong internals powering this market we can feel confident that things will continue on the same path as they have been since the S&P 500 1045 low.

Bull markets surprise people. Why? Because the past two bear markets have left scars and thus there's that continued lack of trust. Many are left on the sidelines as things advance and naturally these folks finally get in at the top when they can no longer take missing the ride. We have been lucky enough to have been in from the lows and will continue to play what we see, even if it seems it shouldn't be doing what it is. Never argue with the message. Knowing the key levels make playing a bit simpler although it's never an easy game. For now the message remains the same. Playing longs are the only way. Nothing is perfect and there'll always be bad plays for a multitude of reasons, but for now it's simply best to play the upside until we get a signal that says we need to change our game plan. That signal doesn't exist in this moment. Let's continue to be surprised but not enough so that we don't stick with what's working.



Jack Steiman is author of ( ). Former columnist for, Jack is renowned for calling major shifts in the market, including the market bottom in mid-2002 and the market top in October 2007.

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© 2010

Mr. Steiman's commentaries and index analysis represent his own opinions and should not be relied upon for purposes of effecting securities transactions or other investing strategies, nor should they be construed as an offer or solicitation of an offer to sell or buy any security. You should not interpret Mr. Steiman's opinions as constituting investment advice. Trades mentioned on the site are hypothetical, not actual, positions.

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