I will keep this report very short, because it's a holiday weekend, and also because there's nothing to add from what we have been seeing since Wednesday. The market was fairly flat at the open today. It started doing its usual slow grinding move up as the day wore on. The Nasdaq acted very well in that it broke out over 4134, or its 50-day exponential moving average yesterday, and didn't stop there. It had another up today, putting some distance away from that key 4134 and slightly rising level.

With the Nasdaq now well above its critical level, the focus moves over to the S&P 500 to see if it can blow through with real force above the double top at 1897. It reached that level on its first try up. On its second attempt it reached 1902, but closed at 1897, so it's clear why that level is so vitally important. Closing a few points above is not a true breakout. You want at least a half a percent, but preferably one-full percent above to confirm the breakout over such an important level. Today moved us closer to that reality, but not quite, so we watch to see if next week will do the trick, which will allow both the S&P 500 and Nasdaq to be in concert for once.

We came in to this week with a bull-bear spread at 39.1%. A very unhealthy number for the bulls to have to deal with. This week we saw overall positive action in the indexes, thus, it's safe to assume, one would think anyway, that we're over 40% on the spread. That's a sell-signal reading, but you don't sell your stocks just because of sentiment. Price action speaks as well, and the price action is bullish. The spread tells us to be extremely careful and to be on the lookout for a reversal topping candle, but to respond to it only when it occurs, since we have no idea when that reality will take hold.

Never anticipate it. Know what we have to watch out for, and then respond accordingly when the signal is given. With poor weekly and monthly technicals, alongside the headache from sentiment, we know to be on alert, but we also know these things can take a long time to kick in.

So, we keep some exposure and watch without worry, because the market will tell us what to do if and when the bearish reversal ever hits. Until then, just keep some exposure in what is still a dangerous environment.

Enjoy the holiday weekend and be safe.

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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