Although every day the risk does increase. We are at a time of year when markets try to hold up but you have to wonder how many negative divergences, and how many 70 RSI tags there can be before this thing rolls over for even a tiny correction. 2-3-4%, or so, wouldn't be too much, but for now the bears can't do a thing with this market regarding sustainable down side action. The markets at least, the bears can argue, closed below their opens today. You have to hang your hat on something when nothing is going your way and that is a legitimate argument. That said, the argument is weak since they never follow through on anything.

Let's see if that can change tomorrow morning, but I wouldn't bet the farm on it. The bears need a strong gap down that does NOT get filled and runs lower all day, even if the move lower is in tiny steps throughout the day. Get something going on your side for once. Until they do it is hard to imagine playing against the long side. In fact, futures are already up after hours although that doesn't have to last. For the moment, no down side anywhere to be found. Another day of this silly grind higher. Bears experiencing another day of misery. Nothing new there!

The financial stocks continue to outperform just about every other sector in the market. The reason isn't hard to understand, with Mr. Bernanke pumping money to them to ignite the economy. It's not really working too well, but they are the beneficiaries, and thus, the market keeps a bid under the majority of those issues. Just like it was some years ago when those stocks led down and could basically NEVER get a bid. Now they seem to be the one area that has a consistent bid under them.

No sign of that letting up any time soon. In fact, many of them have bad news all the time, and yet all they do is go higher because of the Fed. Nothing out there seems to bother them. Many of them caught in illegal acts, paying massive fines and all they do is go up. The more bad news they get the higher they seem to go. They can billions upon billions and yet they rise. How fun is it to be a bear! Bottom line is they are leading and the bears won't be able to do anything for themselves unless they can turn the tide there.

By now you all know that unless the bears remove 1730 they aren't going to get much done. The problem for them is that level is getting further and further away in the rear view mirror. Yes, we are due for selling. The daily-index charts in many cases, especially the S&P 500, are flashing decent looking negative divergences. They are also near 70 RSI. In most cases this would bring about an immediate and decent sell off but, thus far, nothing. It's out there. You can't deny the negative divergences.

You can't ignore the overbought conditions, the S&P 500 making test after test back to 70 RSI on the daily charts once it pulls back just a drop. The bottom line is you should continue to play very safely. Nothing aggressive with stops VERY tight. Understand the conditions and adapt but I would still stay away from going against the primary trend although do what feels right to you of course. The bull is strong. The oscillators are weak with sentiment not in a good place. Keep a drop of long exposure, but be careful.

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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