The market has had a lot of bad news to deal with as of late. Two of the worst are the GDP, and the awful news out of the ISM Manufacturing Report this morning. The number 48.2 is showing contraction for our economy and further contraction from the prior month. Things are going the wrong way for our economy. The market should have gotten annihilated today. It decided not to because it can. The market seemingly wants to retrace higher for reasons that make literally no sense to me. We should have stopped before this level, but the MACD's are crossed, and, thus, the market tries.

They are crossed from still lower levels, so a push even higher seems realistic, but how high this can run. There's no way to know, for sure, as it's a learning experience on the way up. What the bears can say is how unbelievably lucky they are today. The ISM was terrible and the market rose, especially off the lows. If the ISM had been good the market would have absolutely exploded higher today.

The market is begging for excuses to run higher, and had the ISM cooperated, things would have gotten really nasty for the bears. They needed just enough bad news in the real world from preventing Disneyland to nail them. On that level they really lucked out. So now, we have a market that's showing positive oscillators, but a bad fundamental environment. Did anyone way this is tough? You bet it is. Maybe it's just about unwinding up further. Maybe we'll get more than I would have thought possible, or maybe the music will stop right here for the bulls. Japan threw a wrench into the game, and, thus, we need more insight before I can declare what I think will occur. Before Japan it was fairly easy as the down trend had established itself nicely, and the retrace back up would have been far less. Now it's too unclear, but that's life. That's the game. The bulls are getting more than the real world should deliver but there's no way to fully understand where the real world market stops. Neither side in full control, but now the bears have to deal with crosses up. Let's see where the music stops for the bulls. More on that later on in this note as I give resistance levels and support levels that really matter.

If we search around the different sectors of this stock market, we notice that some sectors have been crushed, while others have held fairly well. Some sectors remain in bull markets, while others in corrections, and others still are in bear markets. The worst ones are trying to put in bottoming sticks short-term. The biotech stocks, and the bank stocks, are two of those sectors, but we shall see if they can gain any momentum. Sometimes it's best to try and catch bottoming areas for the biggest moves, but in truth there really isn't anything all that safe in a deteriorating global environment. Biotech's deserve its bad status as those stocks in general are severely overvalued. Ridiculous PE's across the board. The banks have some of the lowest PE's anywhere to be found, so there's more hope that this area could be bottoming out. We'll know soon enough. Utilities are rocking. Gold is back rocking. There are other strong areas, so the bottom line is the market is bifurcated. It's not an all down situation. There are pockets of better areas, and there are pockets of areas that seem to be trying to bottom for the short-term. I think it's probably best to avoid some of the areas that are getting lofty on those daily oscillators, and maybe it's best to focus on the ones coming off the bottom with strong MACD crosses for the very short-term, if you need to play. Any upside you get should be considered a gift. Don't overdo your stay. Things can turn very quickly.

S&P 500 1929 is now solid support, or the 20-day exponential moving average, while 1976 is the 50-day exponential moving average of resistance. Below 1929 the focus needs to be on the old lows at 1869, or the gap up area off the bottom. The Nasdaq has been lagging some, but may catch up tomorrow, if the good news from Google Inc. (GOOG) holds overnight. It should help boost that area in a big way, but we shall see how that holds or not. This market is very trying on one's nerves and is best served in cash, but if you need to play you need to keep tight stops. Don't get greedy on the upside, if you get fortunate. These types of markets can be unforgiving in a hurry. Be smart about things and don't get complacent just because those MACD's have crossed up. At anytime they can reverse lower without warning. If this is ultimately a bear market then there's no mercy. A push back down can occur at any time.

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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