S&P 1345 On Hold For Now.....

Stock-Markets / Stock Markets 2011 Jul 23, 2011 - 06:04 AM GMT

The market has spent nearly two days trying to figure out what to do with S&P 500 1345, or major resistance, that if cleared, opens the door to a retest of the old highs at 1370. The bulls would love to get that high, and put the pressure back on the bears to hold their final line in the sand. However, after spending two days at this level, we closed just below today, and now the market is going to keep everyone guessing at what comes next.

Lots of news stories will hit over the weekend with regards to the debt ceiling everyone is talking about. You'll hear false rumors galore, so just be aware of that. Both sides will remain diligent in their beliefs of what should be done, thus, getting the right tonic mixed just right will not be an easy chore for those who have to get this done and done correctly.

It's not just enough to get a package together. It has to have all the right ingredients, so expect the usual amount of back and forth banter about what's going to happen and when. Because Mr. Boehner came on today and said they weren't close, it caused the market to sell some, although far from intensely as some thought would occur on his statement. We were very close to 1345 when he spoke early today. It shot down to 1336, but then fought back for the rest of the day, closing just below the big gap breakout area. All in all not a bad day for the bulls as volume declined on the selling efforts by the bears. The bulls will come back to fight another day and try to get this S&P 500 over critical resistance at 1345.

The banks have been the nice surprise of late. They have moved higher on good earnings after initially falling back. Bank of America Corporation (BAC) gave a strong bear head fake breakdown, which is good to see if you love higher markets, because it's never good to lose an important stock to a technical breakdown if you're dreaming about clearing S&P 500 1345. It can happen but it sends a bad message.

The recovery of that stock along with Goldman Sachs (GS) and good action from Morgan Stanley (MS) and JPMorgan Chase & Co. (JPM) on earnings as well as Wells Fargo & Company (WFC) have given this sector some real hope. There have been lots of fake moves higher before, but good earnings can't hurt the chances that maybe things will hold in this weak sector for some time to come. The banks ultimately need to firm up because if they fall apart it'll be because our debt was downgraded and if that happens it's lights out for this market anyway.

The semiconductor stocks are also improving now. Great earning's shockingly today from weak sister Advanced Micro Devices, Inc. (AMD) helped the sector, and Intel Corporation (INTC) has completely recovered and then some from its earnings report two days ago. The Sox did print a positive divergence at the last lows, so there's real hope this sector, leading sector at that, will now be more favorable, and this can only help our market.

Most of the reports from this area of the market have shocked the masses. They are much better than most thought and isn't always the way it is in the stock market. In the end, most of what happens in the market is about earnings. If they can hang in there the market should hold up. This quarter was feared to be a bad one, but thus far it's far from that. It's not the best one we've seen by any means, but overall it's not bad at all. Good to see the daily technical's looking so much better in this sector, joining better action in the financials. These two have been the worst so it's nice news for the bulls.

The market was able to clear an important gap down at 1330 two days back. The market now needs to take out the final gap down in the right side of the current
existing pattern at 1345. There are three gap ups for the bulls to work with as support and only one gap down to take out at 1345, right where we closed. The market has now apparently set up shop between the recently cleared gap at 1330 and 1345. A one percent range short-term.

If we lose 1330 it's not good news for the bulls. If we clear 1345 it's bad news for the bears. You want to see the market blow through 1345 convincingly before getting involved with more long side exposure. That or a light volume test of 1330. Right here you wait and act patiently until this resolves. The overall action remains favorable as the market holds well in to the teeth of some unfavorable news. Always good to see bad news not kill the technical pattern in place.

Enjoy life. Play with kids if you get the chance.

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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