The bears tried this morning to take things lower after yesterday's clean breakout over S&P 1080. The futures were down pre-market but worsened once the earnings came out from Goldman Sachs Group (GS) and Citigroup, Inc. (C). The numbers from GS were solid but it had been straight up and needed a pause in the action. It certainly got that refresher pre-market as it was down about 5$. Citigroup, Inc. (C) was awful. Less of a loss than expected but they're still bleeding out badly and this hit the market even harder.

The market got back a small amount of those losses when jobless claims came in slightly better than expected. Bottom line is, we still opened lower and stayed that way for much of the day, but with little follow through on the opening selling by the bears. As the day neared its end, traders on the dark side gave up pretty much ahead of tonight's big earnings reports from Google Inc. (GOOG) and International Business Machines (IBM) allowing the market to finish green across the board. The Nasdaq lagged a bit but still managed small gains after some solid early losses.

When a market clears critical resistance, it's imperative that it holds those gains, regardless of whatever news hits the market and we can see that this took place, even though C and GS never got much of a bid all day. Again, the market was able to hold on to some gains even though some big cap heavyweights didn't do very well. Baidu, Inc. (BIDU), Google Inc. (GOOG), Apple Inc. (AAPL), Amazon.com Inc. (AMZN), and Goldman Sachs Group (GS) all behaved poorly yet there were gains. This is more bullish than not and shows how the big money can rotate to enough places to keep the market moving up even when the big players don't participate.

After hours tonight we have some interesting news from two big players. GOOG had some outstanding earnings and the stock is up roughly 2% or about 10$ in the after hours. However, we had some disappointing news from IBM. The earnings slightly beat the street as did their revenues but only barely so. The stock was priced as GOOG was meaning only a blow out would be acceptable.

IBM is hit hard. It's down about 4% after hours. This negates the good news from GOOG but the bulls can hold on to the fact that at least the futures at this point in time are not being hit very hard because of the GOOG buffer. Of course, as I write this report, it's early. The conference calls from both of these companies can change their stock prices dramatically but for now it's one really good report and one really bad one with the futures only down slightly on the S&P 500.

We now have to focus on the top of the wedges which are at roughly 1110 S&P 500 and 10,250 on the Dow. It will be almost impossible to break through those wedges if we do indeed get there. We will be grossly overbought on all time frames and to make matters worse, we will have even larger negative divergences on those daily charts. Not a combination that would normally allow for a breakout. We would, at the very least, need a stronger pullback to set things back up over time thus it's important to keep those levels in mind. If we get close to 1110 on the S&P 500, you want to start thinking about removing longs and start considering putting on a few shorts. Not too many as we'd still be in a confirmed up trend. The odds would favor some decent selling however from those wedge tops.

Support on the S&P 500 is at 1080 with resistance at 1110. This is the new range to be thinking about. If we lose 1080, we start thinking 1060 or the bottom of that gap from October 2008. The Nasdaq has support near 2200 with support now at 2167 down to 2147 or gap support. Below that we have the 20-day exponential moving average at 2116. There are gap ups now acting as support for the averages thus down side won't come too easily across the board although tomorrow should theoretically see more strength in the Nasdaq and more weakness in the S&P 500 as IBM is weak and GOOG is strong. The S&P 500 will need more watching tomorrow.

Just to go over things once again, please remember how difficult things will get for the averages if and when we approach the top of those wedges. You will not want to be aggressively long at the 1110 S&P 500 area. You may want to short but it's best to see the reversal stick take place if and when we touch that 1110 number. Sometimes you get a breach above and then you get the reversal stick and sometimes you don't quite hit the top and you being reversing. I'll be keeping a sharp eye on this whole process.

Slow and easy as always.

Staying only long for now.

Peace
Jack Steiman

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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