The market was whipped around all week as each and every word out of the mouth of a political leader was used to move the markets up or down in a big way in a matter of moments. We saw the S&P 500 move up and down a 10 handle in literally minutes when the right or wrong thing was ushered out to the public. Sometimes the boys from both sides were arm in arm saying all the right things one day only to have them shoot negative statements against the other side the very next day, the market reacting each time without it making much sense as the technicals are being whipped around. They can look bullish one day and then not so the next. They're not as reliable as we'd like them to be as they're hostage to our political leaders like the rest of us are. Makes trading tougher for you can't trust what you see as much as you normally would.

Keeping it light is best for that reason, and let's be honest, we have no idea what's coming from our leaders from day to day. The risk is elevated for both sides for sure. In the end, however, nothing bearish is taking place technically for now, even with some of the nastiness being bantered about. The market acting as if it knows that over time the fiscal cliff will no longer be a problem. We can only hope this becomes a reality.

I can understand how both sides think they've done something positive for themselves. The bears are fighting at resistance, but the bulls protected the three and a half year up-trend lines and, to me, that's far more important than the bulls failing, for now, to make a bigger breakout. That should, hopefully, come in time with the resolution of the fiscal cliff. It may take quite a bit of time at that, but the key is for the bulls to hold the line as the month of December rolls along.

There have been numerous occasions where the bears were about to take control. The bulls could have said the same. I will say that each side has defended well, but you have to admit, that with such an important issue looming over the head of the stock market, it is a positive that it has held up as well as it has to this point. Of course, should there be no resolution, the market will get crushed. No way it doesn't. The prospects for recession, and possibly worse, will take this market to its knees. Mr. Bernanke knows this and so do the political leaders from both sides, thus, I believe it gets taken care of. That said, it better or we will see this market fall off its own cliff.

The market is cycling around again. This is a phenomenon that occurs whenever the market is waiting on some type of resolution to a critical issue. Sectors find resistance when they get overbought and hit gaps or trend lines. They sell back down, and it can look bad when they do, but they then find support where they have to.

Again, that would be at lower gaps, oversold, or trend lines for the most part. The market finds the time to sell off one area while buying up another. This is keeping the market pretty much at the flat line although with large swings along the way. This is likely to continue until we get a final resolution. It could be another whole month of this, sadly, but I believe the market will find a way to hold on until it gets the news it needs, one way or the other. As long as we keep cycling around we're fine.

With the market uncertain for now, it's best to follow the areas of important support and resistance across the key indexes. We'll talk the Nasdaq and S&P 500 here since they've been doing most of the leading these days. The S&P 500 has great support at the 50- and 20-day exponential moving averages. Those levels are 1408 and 1400 respectively. There's also some horizontal support at approximately 1390. Lots of good support close together. 1433 is horizontal resistance. It's trading above all its key moving averages, so there's good hope for now.

The Nasdaq has support at 2992, where it has both the 50-day exponential moving average as well as a gap. That's powerful, and it will be tough for the bears to break through without very bad news. Resistance comes in at 3040 or horizontal price resistance. The daily charts don't look bad, but again, they need help from our political leaders, and you never want to trust them too much.

Please be patient.

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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