Is this crazy or what! This morning, very early on, the Dow futures were up 96 points. Those futures held well overall, until a spokesman from Germany put out a statement that it seemed there would NOT be a resolution for the Eurozone over the weekend. The result was a 1760-point reversal down in the futures. Oh well! No shock as we all know by now we're tied in completely to the news of the moment out of Europe. Our own backyard has become secondary to Europe. The United States is holding its own, and thus, the reason why this market is holding up in the face of such dire news out of Europe. If Europe was positively resolved, things would blast higher above 1265 on the S&P 500, or that nasty trend line of resistance we failed at again late today in the last two minutes. The market gapped down at the open. They spent the day trading a little below the gap open, and down around 25 points on the Dow.

The Nasdaq gapped down much deeper, and was down over one percent, or thirty points, at its worst. Slowly, but gradually, the market started to come back. Late in the session things turned up sharply in the Dow, and went green on the Nasdaq. A very late sell program at S&P 500 1267 in the last two minutes knocked things down hard. But in the end, not a bad day for the bulls with the S&P 500 five points below the breakout level. This sets things up for a breakout, but you never know. The late day action was bullish for sure, but somewhat rumor-news driven. That's getting old, but the bottom line is the bulls hung in when the bears easily defended yesterday, and it looked like things would fall hard. They didn't, and so, we can hope that somehow the right news hits over night and allows the gap up over 1265 tomorrow, or, whenever. For now, all today did was keep us in the range with the bulls close, but no cigar, at the S&P 500 1265 breakout trend line for now.

It's so interesting from a technical perspective to watch these lines of resistance and support, and how they get handled. We're now near the top, and once again, today we hit 1267 on the S&P 500 very late. The bears threw the sink at it, and knocked the S&P 500 down seven points in literally a minute's time. You can smell the desperation from the bears, and how badly they don't want to see this 1265 level get taken out for, if it does, they know they have no choice but to cover as the bulls will rush in to buy the breakout. There are a lot of shorts in this market, thus, a move to the old highs would be on deck at 1292 if we do forcefully clear 1265, so you can expect the bears to keep trying to keep this market at bay.

Technical analysis can really pay off if you know the exact levels. You can't argue the fight going on at this trend line at 1265. It's fun to watch with boring results if you're a bull, unfortunately, but at least the bulls continue to try to get the job done. Only time will tell, and sadly, the bulls likely need the right European news as a catalyst, but we'll watch closely to see if the bulls can get this rocking higher.
It's all about 1225 on the downside, and 1265 on the upside.

When you take the time to study the daily index charts you really can't get very bearish by looking at the oscillators. The price action has been fine, and the oscillators are fine as well. Normally, these types of confirmations will lead to the breakout, but because we're so news-driven it's hard to trust what you see. If we didn't have the European overhang, I'd say the odds of breaking out would be near 100%. This makes one want to get extremely bullish about things. But we all know you can't play on hope, and thus, you need to keep things in perspective.

It is tempting to jump in all the way, and it could pay off in spades, but again, the risk is simply way too elevated for such actions. The next big directional move comes from a forceful move below the gap top at 1225, or above 1265, of course. If we lose 1225, we rush lower to the 1195 level, or the bottom of that powerful gap up. That was the 490-point Dow day. That loss of 1225 would have to be considered bearish simply because huge volume was involved on that buy day, and it would be unusual for that not to be defended. The daily charts suggest the breakout, but we still need to be patient and not overly enthusiastic because of the European situation.

The Goldman Sachs (GS) had a nice breakout move today. Good to see it clear critical resistance it has struggled with for quite a long time now. It's a leader in the financial sector, and although we have learned not to trust these stocks, and rightly so, you have to be interested when a stock like Goldman Sachs does have a breakout move over strong resistance on a moving average. We all know the story by now.

When leaders don't lead, you should not expect a bigger-picture positive outcome. When they haven't led, and suddenly do, it makes you take notice. A change of character is always worth studying and trying to understand. I know many will say these moves happen from time to time and there's never any follow-through. I can't argue with that at all, but this one is worth noting is all. It's an interesting positive. Bottom line is nothing is a guarantee in this mess, but at least the bulls have something they can hang their hope on short-term.

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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