The S&P 500 made the move over 2194 today on a closing basis. Many onlookers were waiting patiently as the S&P 500 lagged badly behind other indexes, such as the Dow and small-cap stocks. It's important for the most followed index, with the biggest companies, to join the rest of the market on breakout to show confidence that the move higher is sustainable across the board. It doesn't guarantee anything, of course, in this game, but you need to see confirmation of some kind to make you know being long is the right place to be. Getting the breakout today is a sign of confidence.

The day started out with a nice gap up on no particular news. The S&P 500 began to make the move as the morning wore on. By midday the breakout occurred, and from there we watched the bulls hold the line as the bears made a few attempts to bring the S&P 500 back down. All efforts failed. While the breakout makes no sense fundamentally, we can't worry about that. We can only play what we see from day to day. For now, the market is on breakout and should be played as such. With the market overbought on some time frames, we also have to be on alert for a pullback at any moment, breakout or not. Just keep that in the back of your mind.

There really isn't much to add here folks. The bull/bear spread would be my biggest concern going forward, since, if we hold the breakout and ramp higher in price, the spread will fly higher very quickly. Once it clears 35%, then comes the worry about too much froth. That may occur within the next couple of weeks, if this market holds up well. The bulls will be afraid to miss out, and those on the sidelines may come rushing in. We'll worry about that if, and when, the time comes. For now, we're on breakout, but short-term overbought. We'll soon find out if the market wants to stay overbought.

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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