The day after fed Bernanke came out and told the world things stink the market rallied anyway, getting up to the big breakout level at 1099 on the S&P 500 . Interesting in that Bernanke told everyone yesterday that there was risk to the down side with respects to the expected GDP growth of 3.5% over the next few years. The market hated this because it also left the door open to a double dip recession scenario. Today, however, Mr. Bernanke came out and said he did not expect that to happen. Just slow growth but no double dip recession. The market loved it and rallied hard once it opened up for trading.

A strong gap up that kept on surging in spurts throughout the morning. Before you knew it, there we were, trading at S&P 500 1097. The moment was here. Finally, we could get through 1099 and get to 1131. With no gap resistance above, once we get through 1099, it should be easy work for the bulls to get back to the last high at 1131. However, the market had other ideas. Once again the wall at 1099 was too difficult for the bulls. The market fell fairly hard with roughly 30 minutes left in the day only to rally back some in to the close, allowing the S&P 500 to close at 1093, within shouting distance or a nice gap up tomorrow from clearing through. A good day and a nice comeback for the bulls. They can feel better about things but they surely can't feel good yet as they failed yet again at the wall of resistance.

So what is that confluence of resistance that's making things so difficult for the bulls? We have the 50-day exponential moving average at 1091. We have the down-trend line at 1095 and we have a triple top with tails at the last high a few days back at 1099. So 1091 to 1099 is a very tough level of resistance. if you get just one headache it's hard enough. The 50-day exponential moving average alone is really tough. Add a strong trend line and three tails off 1099 and you have more than a headache, you have a migraine. Lots of sell orders long ago put in to those computers at these levels as buyers at lower prices would be willing profit takers at such a difficult level of resistance. Normal behavior folks. This isn't a new market. It's an old one. This is how it always is. the bulls simply have to overwhelm those willing sellers and force the shorts to cover. In a strong market, with all that money sitting on the sidelines, the bulls would have no trouble powering through. For now, we're not seeing the action necessary.

After hours tonight we see some very intense losses on some old favorites. SanDisk Corp. (SNDK) is down nearly 10%, or 4$, on their report and Amazon.com Inc. (AMZN) is down 16$, yes, I said $16. Amazon in pain, but at least Microsoft Corporation (MSFT) came in with good numbers. Then stock is pretty flat after hours on their report, but at least it's not down hard, and thus the Nasdaq is only showing losses of roughly 11 points. It was much worse before Microsoft's report. The S&P 500 futures are barely down so all in all not terrible but it doesn't yet look like a gap up to blast us through 1099 but it's early so we'll see in the morning. Not great thus far for the bulls but maybe the overseas markets can give us a boost in the overnight.

If we should make the move 1099 on the S&P 500 it gives us a window of upside until we get to S&P 500 1131, or the previous highs, before the latest move lower. I wouldn't get too excited about things, even if we do take out 1099 and get to 1131. With no gaps to hold it back, 1131 should be fairly easy for the bulls if we blow through 1099. This doesn't mean we get to 1200 or much higher than 1131.

The market is dangerous now and will remain dangerous for a long time to come thus please don't get overly excited about things, even if we do get a move to 1131 on the S&P 500. I would study the MACD's and the other oscillators. If they suggest we can go higher if we get to 1131, then we'll go for it, but I wouldn't count on it, that's if we can even clear 1099 which I do think we will. Remember, with sentiment showing par as far as bulls versus bears, now is the time for the market to be able to make a move higher short-term.

Peace,

Jack

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

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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