Pessimism has been rocking in over the past two months. Step by step we've seen more and more bears come in, while more and more bulls run out. Shorting positions dramatically on the rise. Fewer and fewer people are talking as if the market can actually go up again. So naturally the market had a nice week to the upside, closing at overbought on the short-term charts for good measure. Shows how much pessimism and short interest can do for the short-term, if not a bit longer than that. The bull-bear spread started the week at minus 4%. It was probably close to zero or slightly green, but still a solid number for the bulls.

Short interest is still sky high, meaning the right does of good, unexpected news could cause somewhat of a short-term melt up, but we just don't know if that's out there. We shall see, but in the meantime, the bulls have a friend in pessimism, and a needed friend at that, since the fundamental news is horrific at best in most cases. The bears need it to stay that way or they'll feel some real pain. In the end, it was a good week for the bulls, but not one where they can say they've taken over control, because they've yet to gain that final moving average above or the 200-day exponential moving average. I'll talk about the significance of that in a moment. The bulls can breathe a bit easier for now.

In the end it's always about removing a level of resistance that separates one trend from another. In this case, it would be taking out the 200-day exponential moving averages across the board, but we'll focus on the S&P 500 for now, since it tested there today. 2030 on the S&P 500 is the number, and, of course, you need a decent close, not just a close over by a point or two. It tried today, but overbought short-term sixty-minute charts put a halt to making it through. A small pullback may be needed first, but over time it's about taking out 2031 with force.

If that occurs, the bears know they're in big trouble. Then add in very high, short interest, and it wouldn't take much to get back close to 2100 again. The bears know the implication, thus, expect a war there. They'll throw what they can, but it may be that they're mostly, if not completely, all in, and won't be able to stop the momentum. We shall see as there are no guarantees, of course. The bulls have taken this market up to the key level, but getting close has no meaning. Success is all that matters. Below 2030 the bears have no problems and they know it. Should be an interesting war over the next many days or weeks.

There's not much else to add, other than what was already mentioned. That's something we'll have to deal with in time, but I think not now. The long-term monthly charts are beyond bad. Any new high over time will create the mother load of all negative divergences, and that will likely equate with the end of the bull market, but, again, hopefully, that's a bit down the road, and maybe we can see equal or higher highs at, or above, S&P 500 2134 first. If, and when, that occurs, I'll be looking for the topping stick that says the party has ended for a year or so.

In the meantime, I think we can get higher. Maybe even new highs higher. A day at a time.

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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