Theoretically, I could end the newsletter right here. Not much to say about today's action other than it was quiet with the job being to try and unwind things a bit on those overbought charts. The market has been hanging out at overbought for quite some time, but it's now dealing with another headache other than those overbought daily charts. Most of the indexes are at major trend line resistance so a pause in the action does make some sense. If the indexes hang in tough for the next few days that would be a very positive sign for the bulls as it would mean they're able to hold off the bears and their attempt to push things back down. Unwinding without too much price erosion while staying close to the breakout area is a good thing for the bulls. The bears desperately need a major gap down that runs lower all day. They are getting plenty of overseas bad news to snack on, but it seems the market doesn't care.

The excuse being that we're better over here, so pour more money from both here and abroad into our market. It is working. We just don't fall with any force. Even when overseas markets are falling and reporting bad news, we simply don't fall. What it will take to fall hard is now beyond my understanding. Ms Yellen has the market locked and loaded. In a way she must be happy about the worsening news overseas, since we're not getting that type of bad news. She knows this means more good tidings for our markets. That's the way she can get that elusive inflation she's looking to see take place. It's not coming in any other form other than froth from our stock market. But trust me folks, she'll take it however she can get it. So Yellen is rocking in delight as the overseas world struggles, and we move ever so slowly, but surely higher. Good times for now for our fed leader. Bad time for now for the bears. We still haven't broken through those trend lines yet, and that's the last line in the sand for the bears.

With the fed in control, and, thus, technical's not working, we have to be on alert for a breakout, even though it makes absolutely no sense but technically and fundamentally. The technical side says no due to massive overhead negative divergences that would form on any move to S&P 500 2134. Fundamentally, I don't think I even need to talk about it, because it's so obvious. The market still has an amazing number of stocks trading at P/E's that are off the charts not to mention stocks trading without even having a P/E to its name. The level they trade at versus their numbers is Disneyland, even for Disneyland. Hard to wrap my head around anything in this market. It's so out of control, but who cares, right! No one, it seems.

But there are still enough bears around to keep this moving higher if it wants it badly enough, and, for now, it seems like it wants it pretty badly. Or should I really say it's clear the fed wants it badly enough. The market, I believe, would rather puke and work off those nasty negative divergences, but good old Yellen won't let it happen. For now, we obey price and not reality, but do know that one piece of the wrong news will send things reeling lower. Never let your guard down. Never get complacent. All we really need to focus on is whether all of the indexes can eventually break through the trend lines just above current price. It is going to be a very interesting week, for sure.

Let me spend a few moments going over why you need to make sure you don't get carried away with playing too aggressively. There are problems out there, even though for the moment they're having no effect on the markets. They can, however, play out at any time without warning. Overbought, daily index charts just barely unwound off 70 RSI readings. Negative divergences are small time on the daily index charts, and big time on the monthly index charts. We still have an overall weakening global economy, and we also have froth at ridiculous levels. Stocks selling at levels that are just not appropriate in real world.

Maybe we blast out and ignore all the negative divergences. Makes no sense, but maybe in this new market we do just that. I wouldn't bet heavily on it though. Buy when things get away from overbought, Be smart and level headed. Greed will be better served some other day down the road.

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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