The market came off the bottom with a series of gap ups as it back tested lost 20- and 50-day exponential moving averages. The big question was would those moving averages get taken back out or would those levels act as a wall of resistance, cascading the market back down once hit. We got through the moving averages, and hit the 197.00 SPY gap. That is where the market rejected the move higher with Ukraine/Russia the catalyst to get things moving back down intraday. At the same time that news came out, we also saw the short-term sixty-minute RSI's hit extreme levels of overbought with some readings as high as 80.

80 RSI along with gap resistance, along with bad news from Russia, and down we went. 23 S&P 500 point off the top within forty-five minutes. Not bad at all. You can unwind a market very quickly with the right mix of events both fundamentally and technically. We are in a far more difficult environment now with regards to the bull rocking higher, so we can't be shocked that today's gap was short term. A third straight gap up the final top short term. The bears are happy we didn't get through S&P 500 197.00, while the bulls feel better about creating some gap ups on this back test. Neither side thrilled, but neither side in despair for now.

With the move off the bottom, and with today's top in place, we now understand where we are from a technical perspective, and neither side is going to be happy about this. The range is enormous. Spy 193.00 to Spy 197.00. In between is now total noise, and when a range is this wide and loose, you have to deal with tremendous whipsaw that can get very emotional. This is where the market takes down the most traders. Too much action for a lot of meaningless noise.

With the spread so wide you can enter a play, or a series of plays, and get shaken out very quickly thinking something is happening that in truth may not be happening at all. With forty points the spread, think of how dangerous it can be to get overly involved. Only when we break below 193.00 on a closing basis, or break above 197.00 on a closing basis, can we get excited about what's next. That can take some time, so be careful not getting overly involved when you shouldn't be. We are now in a very wide and very loose trading range. Dangerous the best word for it.

The bull-bear spread probably took a move higher this week sadly. It would have been best if it kept falling down in to the 20's as a spread. We closed last week at 30%. Now we're probably at 32/33%. Top was 46%. If we can get one more very-nasty leg down in a correction we'll get those levels down in the teens. How awesome that would be for the bulls, but that is still an unknown. Will the rates game prevent such a move lower? It's possible, but there's still every chance we'll see another strong move down. Be careful and play the 193 to 197 range appropriately. Watch to see which range breaks over time on a closing basis with force. Day to day folks.

Have a nice weekend!

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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