The market has made a nice move off the bottom this past week, but when it ran into the highs that had thrown a gap lower and a black candle preceding that, it failed. It could not get through that gap. It could not get above that recent black candle at the top, and thus, be ready for more chop to drive you all crazy. And why not? This is how you get folks to feel like they no longer want to be part of the game. Mission accomplished by the big money. Take it down. Tease everyone on the way up. Pull the carpet out once again. Get folks frustrated. And on and on the game goes.

Keep in mind, we sold when sentiment got to roughly 30% more bulls along with 70 RSI's on the daily index charts. Well, we got to 70 RSI's on those daily charts again on this move up, and 70 RSI on the index charts when you're running into resistance, isn't the best formula for upside. Bottom line for the week was it was a test back up to the highs from last week, and that's where it failed. For now, we have a double top in place with a handle likely to form again.

Remember, that means some downside action is likely. Not guaranteed, but likely. It doesn't mean you should get bearish. It also doesn't mean you should be shorting, but, of course, do what feels right to you. I would say the best way to approach this type of market would be to wait for things to set up on some lateral action. Let oscillators unwind. Let things get back to good support areas and then play all over again. For the moment, the market is simply in neutral territory.

A lot of bearish looking sectors, such as the transports and materials, took nice turns higher this week, which protected important breakdowns. That's normal action in an ongoing, bullish environment. It doesn't mean they're out of the woods. But based on the oscillators on the index charts they represent, it seems like the worst should be behind them, even if we sell some here. Sure, they'll give back some of the gains, but they should easily protect their recent lows. Time will tell, but they're set up to do just that. A lot of other sectors, such as the financials, in particular, hit very overbought today on its highs, and now they should need some form of a pullback to unwind overbought conditions. The point of this being it shows how the market will work its way into a lateral environment by cycling around different sectors on a continuous basis.

It's the way the big money keeps the market from breaking down. If the market were to eventually break lower with force it would be done by no longer supporting the oversold sectors at support. Big money would allow them to stay oversold, and thus, to break down. For now, you have to give the benefit of the doubt to what's been taking place. Clearly that is to cycle around, and play that which is oversold and turning up on the oscillators. The bears have to show they're capable of creating different behavior. Until then, stick with the trend in place.

The jobs report came out today showing job creation in line with expectations. 114K jobs created. Not bad, but nothing great. However, the market was initially excited by this as it showed the economy was still hanging in there. The market gapped up on this news. Watching the jobs situation, along with the manufacturing reports, is key to the future of this stock market. We're talking bigger picture here. If it becomes apparent that all the QE's in the world is not going to make a difference, eventually the market will give it up.

The reports that come out from these two areas is going to decide the market's fate over time. If they can continue to improve a bit, the market will celebrate it. If they show further deterioration over time, there really is no hope down the road. The market would eventually give it up. It's still playing on hope. Nothing wrong with that, but you must be prepared should the time come that the market feels there's nothing but clouds ahead that aren't going to clear up any time soon. We have some months, it seems, to see how it unfolds but it must be watched closely.

As the market chops all over the place, keep in mind that S&P 500 has massive long-term support at roughly 1419. It can test back to that 50-day exponential moving average in time, and even breach a bit. But keep in mind that as long as we don't lose it with force, testing it is not bearish. Selling isn't always bearish folks. The chop we should experience here isn't bad news, so try to keep that in mind. Don't lose sight of what's taking place. Just keep that 50-day exponential moving average on your computer screen and remember that all selling above this level is just noise in what is still a more bullish environment.

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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