The S&P 500 has refused to give it up. It's in a trading range from 1812 support horizontally to 1850 resistance, which is also horizontal support. It's a 2% range, and within 2% can come a lot of emotion. However, it's been riding off the 20-day exponential moving average lately currently at 1833. This tells me the bulls are readying themselves for another move up, so the bears better get busy and fast. If we can clear 1850, and close above with a little force, it means the bears will have to take inventory of what they're holding. That also means they will likely want to lighten up, thus, some added fuel from short covering.

We have tested the 1849 and 1850 on four different days. The bears have clearly set up shop there, while the bulls, again, have set up shop at the 20's or 1833. The 2% range has recently tightened up to a 1% range. When studying the daily chart, it is important to ask yourself if the technicals are saying it's possible to make that breakout move over 1850, and there's nothing there to say it can't. It certainly doesn't have anything to due to sentiment, but the technical set-up would allow it. So here we are again with the market needing to sell, but things setting up bullish. It's never dull to be sure, and there's a guarantee we make that breakout move, but the bears are sweating for now. Just don't forget that nothing is coming easily here.

Sentiment is not helping again. It rose back up from 40.8% to 42.5%. It's not at the most recent highs, but it is in terrible shape. No question that liquidity, along with short- and long-term rates continue to help the bulls, but you have to fear the sentiment readings we're seeing day-to-day and week-to-week. There has to be a price to pay at some point, but it's not our job to guess when. Your job and my job is to stay with the trend as long as it holds up knowing that we'll get hit with our longs at some point.

But you keep some long exposure until the bears can prove that it's time to get rid of all longs and move to cash or to the short side for a short period of time. I was hoping that last week's-market action would push the spread down to the 37% range, or thereabouts. I was dead wrong as it rose to 42.5%. Oh well. We have to deal with reality. It doesn't mean run for the hills. It does mean to stay away from froth. It also mean some light exposure is fine. Sentiment is still on a sell signal, so please don't let your guard down, even if we have another move above S&P 500 1850 for the short-term. Respect the game, or you'll pay dearly.

This earnings season has been a disaster. However, this evening is a good one. F5 Networks, Inc. (FFIV) on eBay Inc. (EBAY) and Netflix Inc. (NFLX) hit home runs. Three big technology stocks that lead and will help the market short-term. It doesn't mean the market will make the move up and out, but it was good to finally, and I mean finally, have a good night of earnings. The worst quarter in my memory, but hopefully tonight will be the start of something better for the big leaders still to come. You have to believe that the market is going to need some big nights to keep this going.

Bottom line is we finally have a good night. Will it be the catalyst to get the S&P 500 over 1850 tomorrow? We shall learn about that soon enough.

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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