After 1,200 points down on the Dow over six trading days it made sense for the market to try and rally hard for a few days since the short- and long-term charts, or the 60 minute and daily charts, were oversold. 30 RSI on the daily index charts is where this market has blasted off from. It did hit 20 RSI on the last nasty plunge a few months back, but this bull market has laughed at the bears when it gets anywhere near 30 RSI on the daily charts except that one time. So what could be the solid catalyst for this rally was the question folks were asking.

Most felt there didn't need to be a catalyst other than 30 RSI. Some good news would be a huge help. First came China when it rocked up two percent last night. That alone should have been more than good enough. In fact, the futures did ramp up nicely. Over 20 S&P 500 points. That wasn't the end of the good news.

The jobs report came in shockingly high, which was much better than expected. The S&P 500 futures jumped another ten points. The market was ready for a big day. The bulls would be celebrating as the S&P 500 was about to bounce back up and further away from key support, to be discussed later in this article. We gapped up huge and that was it. It was downhill all the rest of the way. Nothing terrible, but the thirty-point up swing went into the toilet. Surprising, to say the least, and a major change of trend to what the bulls have gotten used for nearly seven full years. There have been lots of changes lately that we're not used to in terms of this bull, and, thus, maybe we should all take notice. The market has been frustrating the bulls for over a year now, but it has done so by moving laterally. Now we're starting to trend down. The frustration after today has to be ramping higher for the bulls. This was their day, but it didn't materialize. Maybe Monday. Maybe, if we get another strong session out of China the bulls will get their day and based on oversold they are due. We shall see if they get what they're hoping for Monday morning. That said, today was a total disappointment.

You will see the S&P 500 weekly chart this evening. It's self-explanatory. The seven-year up trend line on the weekly chart has been tested numerous times only to see the market launch higher. The question being will it be different this time or not. No one knows for sure. It seemed as though the end was at hand many times, only to see the market fool the bears. Relieved bulls always gaining the upper hand on price. So here we are again. Very close to the trend line at 1925. We closed at 1922, but that's not a breakdown. There are changes in this test different than what we've seen in the past. More and more stocks are trading in bear mode by far. More and more sectors are broken than before. Moving averages are crossed badly, but now only beginning to do so, and those monthly charts have had a chance to flash deeper, negative divergences with each new high. None of this guarantee's a strong move lower below this key trend line level of 1925. It's so easy to get bearish thinking it has to happen. It doesn't have to happen, but the odds are at least far higher for success than we've seen before. The bears certainly have the right to be more hopeful, but they know hope doesn't get the job done.

It's always about price and volume on the break of price that's so critical to the short to mid-term direction of this market. Study the chart. Recognize the difference on both sides of that trend line. You would think the bulls would fight hard to keep it up. And they will, but there's only so much they can do if big money wants this market to go away. It's unusual to see big money not blast this market up with so much good news today, so maybe they're no longer interested in doing so. We are close, and it's quite unusual to see this market lose 1925 on an intraday basis. That type of important support break is usually, if not just about always, happens with a large gap below. Will China afford the bears that opportunity this weekend? Maybe. Maybe not. Maybe it has to be something else no one sees, since so much attention is being paid to China now. We're going to find out soon enough folks.

Next week is going to be more than interesting.

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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