The bid is back in for this market after the weekly charts printed outside sticks last week when compared to the action from the previous week. That normally tells the worst of the selling is over, but that does not preclude one more move lower over time to double bottom. That's unclear for now. The market tried selling today, but, sadly, it's now all about Apple Inc. (AAPL), which had a strong day to the up side, meaning the Nasdaq out performed, closing in the green while the S&P 500 and Dow were down a little bit. In reality a nothing-from-nothing day. However, with the Nasdaq hanging tough, it allowed its short-term chart RSI to remain in the upper 70's. Not a good reading for buying new plays.

The Nasdaq may try for bottom, its last gap down at 2977, but if it gets there, we'll be seeing RSI's in the lower 80's and that's simply unsustainable. Either way the chart will have to unwind before there's any chance of sustainable upside action in that sector and in the market overall. Sadly, it seems when AAPL puts in a topping stick the Nasdaq will have its unwinding. Unhealthy to have one stock so in control of the whole market, but that's the way it is for now. With today's action it seems to me that the bulls can start feeling much better about things, but again, there will be normal pullbacks along the way as well as the potential for one more larger pullback to test the recent lows over time.

The market has been one big whipsaw. There's been lots of large moves up and down. The move off the top was a large one lower. It felt like the beginning of a new bear market, but it wasn't, and should not be going forward for at least the medium-term. Lots of levels were broken to the down side on this 8% pullback but, in the end, the key level of support held on the S&P 500 as well as all of the indexes when looking at the longer-term 3.5 year trend lines. The major factors that show the beginning of a new bear were never in place. Sentiment never got close to extremes. You almost always see near 40% on the bull-bear spread, but this time we only got to 29.7%. No extreme at all.

Good news was still being treated as good news, which doesn't happen when a new bear has begun. If a stock reported good earnings, it was rewarded, not torn apart for no good reason. Lastly, there was never any consistent distribution volume off key-topping areas. With none of those factors taking place it just didn't seem to fit a new bear, thus, why I pretty much always labeled the newsletter as a correction still under way. You always have to be open to a new-bear beginning. I still am always on guard but I don't think that's in the cards here.

The market will be keenly interesting and focused in on the talks that are ongoing regarding the fiscal cliff. In the end, that will have a lot to do with where our market heads. If the leaders can get it together, then 2013 should be a very decent year, although you can expect the usual scares along the way from Europe, etc. Nothing will necessarily be easy but the trend should be higher if the democrats and republicans can play nicely together before the deadline hits at the end of December. We'll see. We can only hope that things will get done for the good of the economy, and thus, for stock market and the wealth of this country.

The S&P 500 is still trading a bit below the big breakout level of 1408. The only problem is, if we break out now, we break out in to very overbought conditions, especially on the Nasdaq, thus, the breakout is likely to struggle early on. It would be best to unwind the oscillators without too much price erosion. That would set things up nicely for the bulls. It's never as easy as it should be, thus, we'll probably break out a bit in to overbought, and then have to pull back some. No way to know for sur,e but the bid is back in the market for now. Until it isn't, of course. Stay patient if you're a bull with the best buying to come when the oscillators reset off overbought. 77 RSI on the Nasdaq is not the time to be buying. If it goes higher first, we'll have to pull back that much more.

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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