The market sent a strong message today about what it thought of the prospects of Larry Summers taking over as the head of the federal reserve. Mr. Bernanke and his liquidity machine are on the way out this January. The market wanted to get more insight into who may take over. It wanted someone more in tune with the ways of Mr. Bernanke. In other words, free cash. Mr. Summers is known to be the opposite. He doesn't believe in nonstop stimulus where Ms. Yellen does believe in it. The market was hopeful to have someone step in who would basically keep the machine running if necessary, and thus, celebrated the news that came out over the weekend when Mr. Summers said he was no longer interested in being the head of the Fed world.

Futures blasted up all over the world. Our futures were up huge last night with the Dow up over 220 points when adding in pre-market fair value. We basically opened on the high and faded slowly but surely for the rest of the day. The Nasdaq closed over 40 points off the high. The pullback was not shocking since intraday RSI's reached over 80 on the Dow and near 80 on the S&P 500. The Nasdaq closed near the lows with the Dow and S&P 500 holding on to respectable gains, although they too closed well off the highs. Anyone who bought the market open took losses for the day. Bottom line is today is yet just another day in this meandering market trading in quite a large range between 1627 at the bottom and 1710 at the top. Bulls did do some damage, but they were unable to clear 1710 key resistance. Thus, we will likely trade on news events in the days ahead. Until 1627 or 1710 gets taken over with force, no one is truly in control for the short-term. Meandering will continue for now.

You watch to see where a market throws its dollar bills when you get news such as we got over the weekend with regards to Mr. Summers and Ms. Yellen. Because she's a clone of Mr. Bernanke it's no surprise that the financials got a decent bid for the day. The money flowed out of technology and into financials because traders see that area as being the biggest beneficiary on the news. That said, this market keeps doing the one thing that keeps the bull going. Traders are finding places to hide even when things get overbought or when a sector or two are out of favor. Rotation, rotation and more rotation and that's the key to a strong bull market.

Yes, there are moments when the market needs to sell a little harder for a while and nothing really holds up. But most of the time different sectors of the market are finding a bid when others are not. That keeps the market meandering about, but it also keeps the market from falling too hard, thus, making things more bearish. So yes, news is key for the market now, and we'll get that in a big way on Wednesday when we hear from the Fed. News again will drive the market. Hopefully it won't be to the theme of more meandering. My gut says why not, let the market sell the news initially. Maybe this time the market will fake them out, but it makes more sense to get some selling if there's even a hint of pulling back on the those free dollars. Fireworks Wednesday should be the theme of the day.

With the S&P 500 closing below 1710 due to the late day pullback, that level remains the key level of resistance for now. If we can clear 1710 with some force, we can get to that long-term up-trend line at 1730. Neither one will be easy to clear, especially 1730 if we ever got there. The market would be very overbought, and it's very rare for those long-term trend lines to clear on the first try. They can back and fill while trying to break through, but may take many attempts before getting through, if indeed we eventually do get through. 1674/1672 is gap support on pullback's now. Some exposure makes sense. Too much does not at these nose bleed levels.

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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