This has been one fascinating move up in what is undeniably a bull market. It's been more of a grind up most recently, and that's a good place to start this discussion. Just four weeks ago we had a bull-bear spread of just under 30%. That's getting dangerously close to complacency. Any time it's over 30%, especially when it hits 35%, we have to be on guard for a very powerful pullback. Understandable, as we need to lose the momentum as things are just too frothy. My concerns were laid to rest over the past month as the grind in the market served to bring down those feel good emotions throughout the market place. It appears the masses were expecting a very big pullback and went south on the market in terms of their short-term thinking.

To that end, we wake up today with a bull-bear spread of only 17%. When broken down, its 43.6% bulls and 26.6% bears. That's nice if you like markets that should go higher over time. You're working on almost being too bearish, which is music to the ears of each and every bull alive. It's not uncommon in bull markets for folks to become non-believers as they look around at the fundamental news, and they simply can't buy into the market running up, so they turn sour on things trying to convince themselves things will get much cheaper in the not too distant future. They miss the markets continued move higher, and then they fall prey to the I must buy any pullback scenario. They miss a whole lot waiting on entries that just don't present themselves. From a sentiment perspective alone, this is one very interesting bull market as today shows us, with regards to believers, of what's taking place. Again, it's good news for the bulls' bigger picture.

Another interesting aspect of bull markets is when, in a single moment, a sector that has lagged viciously for years can suddenly become a leader. If you have watched the financial stocks for the past many years, then you know how poorly they had performed. They simply could not get out of their way. One attempted breakout after another would fail, and then, in no time, they'd make new lows. Sometimes they would stay oversold for an extremely long time. Nothing could take them out of their constant malaise. The news was bad, and although we know a sector will turn up before we hear the good news, it seemed as if the market was never going to anticipate an end to the financial nightmare on Wall Street. It wore people out, and most traders gave up on the sector.

I never got involved on either side of that trade for the most part. I simply stayed out of harm's way. Now the sector is doing the exact opposite. It can do no wrong, even when bad news hits. It gets a bit overbought, and sells off a bit, but leads right back up long before it can get oversold. Things do change that fast in this game, and now the weakest of the weak for many years, is a powerful, leading beast for the market. If you're patient in this game, you'll see everything over time.

The fed did something yesterday he has done over and over for quite some time now. He has found a formula that works with regards to keeping the market elevated. Now remember, his job is, and always will be, to keep the markets moving higher overall. Why? It's simple, really. An advancing market means good 401K reports. Good 401K reports means people will spend and hold the economy up, until, hopefully, a solution can be found, with regards to the massive debt created by the printing of endless dollars. Those dollars were necessary to keep the financial system from collapsing.

Bottom line is he needs to keep the country advancing with job creation, and the only way that's possible is to keep the economy on track, and the best way to do that is to keep interest rates near zero, so money will be forced into the stock market. He said interest rates will be near zero for up to three more years. His intentions are clear, and his plan is working perfectly. You can expect his plan to remain in place for the foreseeable future. He knows what he's doing, but, hopefully, there won't be a big price tag years down the road. Time will tell.

Strong support on the S&P 500 is now at that 1370 level just taken out by the bulls down to the 20-day exponential moving average at 1361. 1400/1410 is resistance followed by 1440, or thereabouts. We are somewhat overbought again, but you know the drill there by now. Bull markets can, and do, remain near overbought for very long periods of time, although, and you know this drill as well, there can be a pullback of roughly 3%, or so, at any time to unwind. That would only be healthy, not bearish. Maintain some level of action in the game here on the long side, and use appropriate weakness to get in new plays.

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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