Did we top out today? We basically made a double top at 1597 with a print of 1596 today. That's a double top if ever I saw one. It would be a natural thought to think that it's all over now for the market. It's possible that it was a double top and down we go from here, or we could just as easily hang in there quite well ahead of that massively important ISM Manufacturing Report headed this was early Wednesday, just thirty minutes into the trading day. It would make sense for the market to be more-quiet-than-not tomorrow as it decides what to do based on that very report. No one knows what it will be, but if it repeats last month performance, we're in trouble as the economy took a bad nose dive with the reading falling from near 55.0 down to the 51's. Another move like that and we're in recession. Will the number be able to reverse back up?

A lot of important economic reports this week that will decide whether we take out 1597 resistance, or whether we begin a strong pullback. Don't forget, we also have the Jobs Report on Friday, but before that we see the ADP numbers and jobless claims on Thursday. Oh, throw in the Fed on Wednesday. A lot ahead that will be market movers, so before you get too bearish because of the double top and pullback off it today, see those reports and then you'll know whether it's appropriate to become bearish short-term. The bears see the double top, and they did successfully defend it, so it's do or die time for this market regarding breakout or pullback. The Fed wants up. The Fed is printing. It won't be easy for the bears. Won't be that easy for the bulls either short-term. Stay tuned. An interesting few days are ahead of us all.

The Nasdaq, or those technology stocks that live there, are starting to outperform the rest of the market, which is a change of trend for the short-term. The Dow and S&P 500 have clearly been outperforming for some time now, but we have watched Apple Inc. (AAPL) crater lower for quite some time, and because of its heavy weighting, it kept the Nasdaq underperforming. However, if you've been watching lately, the stocks has woken up in a big way. It's taken out critical resistance at 425 trend line, and is now trying to get up to its 50-day exponential moving average at 436. If it can clear 436 with some force there isn't much resistance until it gets to 470.

AAPL has been in a bear market for a long time, but this looks to be changing now to more of a bull stance unless the bears can do some serious damage short-term. If AAPL is changing markets then it's likely the Nasdaq will be doing better than the other indexes for a while to come. When the Nasdaq leads, the market is better served from a bullish perspective. If froth is leading then it's good news. When defense is leading things are more in question. It looks as if we're about to switch gears but it's still a bit too early to say for sure.

A lot of people like to focus on the Mr. Bernanke, and, of course, that's quite understandable. They're very anxious to hear what he'll have to say at Wednesday's meeting. Will he change his wording? Will he talk about raising rates? Will he talk about removing liquidity? In my opinion the answer to all of those questions is a resounding no. He understands how weak the economy truly is, not only here but abroad. He won't take any risks by removing the liquidity machine or raising rates to make things more difficult for folks.

He also knows that if rates get raised too high too fast folks will run out of the stock market and that's death to the economy. The answer is simple. He will do nothing to upset things as they are right now. He won't change it now, and he won't be changing anything for a long time to come. The machine will remain humming along 24/7/365. Rates will remain near zero for years to come. Only when the economy can run by itself without help will he stop. That's not happening any time soon.

The market is full of risk folks from many perspectives, but it's also tough as nails. Overbought. Double top. Some negative divergences. However, it has a lot going for it as well, which tells me we'll only see pullbacks and not much else when things sell off. The selling can get nasty short-term, but it shouldn't turn into anything that makes things look too ugly. Keep things in perspective. The market is good but risky. Don't over play. Keep it light. Keep some exposure. Watch the economic reports this week for further insight. Watch to see if the S&P 500 can blow through 1597 and carry things much higher.

Interesting times for sure.

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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