We closed at 1573, thus, that really is a hold for now. It doesn't look too promising in terms of holding too much longer but the bulls did fight back some today from the breakdown. The S&P 500 fell hard and lost 1576 with force but again, did manage to come back late and hold for the most part. The reason we most likely held wasn't anything bullish in nature. The reality is it was most likely caused by oversold short-term charts on the S&P 500. Dow and Nasdaq. In addition, some leading stocks, which have been crushed recently, hit 30 RSI on their daily charts and that hasn't happened in a very long time. This brought in some bottom fishers expecting a bounce off of oversold not seen in some time.

The move up off the breakdown and recovery wasn't special by any means. We got well above only to fall back below by a hair late. The buying wasn't across the board either. Few stocks led the way instead of it being everywhere. If a real bottom was being made we'd have likely seen the big boys and girls of the stock market blast higher. Stocks such as (PCLN), Google Inc. (GOOG), and a few others we normally see explode when things have turned very bullish. Goldman Sachs Inc. (GS) didn't do much nor did any of the financials, so I think we probably rally a bit first but ultimately lose 1576 with some force before setting the bottom. The bulls will try hard to get us back over 1576 but I don't think it'll hold very long. We shall see, but today wasn't a great day for the bulls, even though they did manage to barely hold the line at 1576. Yes, like I said, we did close three points below but that's not a breakdown.

The real trouble with today's candle sticks is that we saw a second very large gap down in the index daily charts across the board and those gaps remain open. The Nasdaq and S&P 500 in particular now have two huge open gaps and that puts a cap on the buying short-term as the bulls know the bears will run in and pound the market if we get back up to the first gap top. Two large open gap downs really hammer the bulls psychologically. The market has some real short tern technical damage that won't be easy for the bulls to overcome. The bulls had the advantage for a very long time but not the shoe is on the other foot. The bears know they're in control and aren't likely to allow 1600 resistance get taken out on a closing basis before knocking this market down to lower levels in the days ahead.

The bulls are going to need some very unexpected good news to hit to wipe out those gaps, but to be honest, that's not likely to happen any time soon. Short-term technicals say we're likely to head lower although I think a small rally may try to take place first. That's no guarantee but it seems with today's close being what it was, the bulls have a shot towards 1600 but another large gap down wouldn't shock me either although I don't honestly expect it. Just know the technical set-up is more bearish for now.

No matter where we look now there are leaders breaking below key 50-day exponential moving average support. When they back test they are failing badly and heading back south which is a sign that the big money is not ready to support these stocks. They get small moves back up from oversold, but they are not blasting back over those 50's with strong volume and oscillator movement to confirm the worst is behind us. When they can burst above and stay there for a few days then we know things are much better. For now gaps and moving averages are stopping any and all gains.

With this in mind we look for support. 1576 is still support on the S&P 500, but below that we have a confluence around the 1530/1540 area. Just below that is the 200 day exponential moving average near 1512. We could go all the way down there but that's unclear for now. The resistance comes in from 1600 to 1614. I don't think we'll be seeing 1614 any time soon to be blunt. If we can get down towards 1530/1540 we will actually be oversold on the key index daily charts for the first time in quite a long period. It would serve the market well longer term but for now, one moment at a time. Let's see if we can clear above 1600. If not, I expect another strong move lower soon.

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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