The market has spent a lot of time trying to get back over 1700, and finally made the move, albeit barely, yesterday. It wasn't forceful by any means, nor was it followed today by anything to get excited about. Most of that caused by the Jobs Report this morning pre-market, but more on that later. The news was poor economically this morning which caused a gap down that did back test the breakout at 1700. The bulls fought hard and were able to save the S&P 500 from falling below the entire day. Not bad when you consider the bad news on jobs, but the problem still remains that we weren't able to pull away from 1700 to give the bulls a sense of safety for at least the short-term if not longer.

When a market makes an important breakout, it is normally followed by a further run up in price almost, if not immediately. The news to come out would not matter. The breakout would be clean and the bulls would follow through quite hard to the upside. The fact that this didn't happen today is not great news for the bulls, but it is not yet a death sentence either. Time will run out shortly though for if the bulls can't get going early on next week the bears will seize on this due to overbought conditions and the breakout will be false in nature and a correction will definitely be upon us. Not what we're hoping for if we want to see the bull continue in the very short-term. So today the market didn't explode higher, but I guess if you consider the bad news economically, at least it held above 1700. Time is running out on this overbought market for the bulls. Put some distance above 1700 or start a correction very shortly.

The Jobs Report came out this morning and fooled everyone. The expected number of 180k was raised up quite a bit after the ISM Manufacturing report came in so well for the bulls. A number of 55 was so positive and unexpected that the world thought the Jobs Report would exceed 200k jobs created and the expectation was also that wages would rise and the work week would extend. Nothing happened as expected. The job creation was 160k. Wages fell as did the hour worked weekly. Only the rate fell but that was due 100% to the fact that those who stop looking for work don't get counted.

The report was really a disaster after what the expectations had risen to. The economy is still barely chugging along but at least some jobs are being created. The other negative in the report was the type of jobs created. They're mostly the lower paying or temporary jobs and not the higher paying long term type. That's what the economy really needs and is still not getting it. Of course, this just reaffirms that the Fed will keep a lot of liquidity pumping through the system while also keeping short-term rates quite low. A real disappointment for our economy today, but at least the market held its own in the face of really bad news. Fed protection is the saving grace once again.

The same problems that were here a week or so back are still here now. Most time frames are not looking good with regards to overbought conditions. It's not great to have daily, weekly and monthly charts sitting at overbought. That said, the bears still need to do damage in terms of removing 1700 with a bit of force on a closing basis or overbought can stay that way for a decent period of time. Breaking out is critical. Overbought is secondary.

The bears need to get going now if they have a shot at a real correction in the short-term. It'll come in time, but they don't want it coming from much higher levels. That would not be a good thing for their confidence. Sentiment isn't terrible right now but still close to 30% heading into this week so we need to see if we're back over that level again once we get the new reading next Wednesday. The bottom line is there are enough red flags with overbought and negative divergences to keep you from getting overly bullish. Use 1700 on a closing basis as your guide in the days ahead.

Have a great weekend!

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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