Once again, the market could find no sellers. The masses were thinking to sell the Jobs Report if it were good. Who can blame them since the market is so overbought. They were right. It sold. However, once it sold off some from the early morning highs, it was bought up once again. Not to the levels of the early day highs, but no real selling one would think likely after a strong early day pullback and still at overbought.

The strength of this market is a bit strange, but you never fight the price action of the market. It speaks above all else. It doesn't care what the technicals are saying. They've been flashing overbought and negative divergences for quite some time, but have yet to do anything about them. You don't front run just because something exists technically. You need to see the reversal first and we just haven't seen it take place. Until it does you stick with what's happening and that's pretty clear to everyone I'd think by now. The bulls are in full and complete control.

The bears have nothing. For crying out loud they can't even get a simple pullback going of 3-5% to unwind grossly overbought oscillators across all time frames. They have strong negative divergences staring them in the face and nothing. They are out of the picture but you never let your guard down and you never play inappropriately. You see the headaches the market is facing and you respect them at all times, so just in case they kick in, and at some point they will, you don't get crushed. One thing I've learned is that you must respect what you see. You keep playing the way the market tells you to but also with one eye on the problems that are out there so you don't get unnecessarily hurt. Today was another strong day for the bulls even though technically it should not have been. Never fight price action.

This morning the market was anticipating the Jobs Report to be strong based on the ADP jobs report that came out on Wednesday. The market wasn't disappointed at all as the jobs created was well above the 160,000 expected. The reading well over 200,000 and the unemployment rate was also a tick below expectations. Good to see things improving on all fronts for the people of this country. Hopefully the numbers are real and not made up but we'll just have to trust our leaders. Tough to do but we have no other choice.

The market gapped up huge on this report and probably why weakness was gobbled up quickly by the bulls once we sold off early on today from the gap up highs. If the economic reports keep coming in strong the bears are going to find it more and more difficult to get the market down. They have been on the improve and show no sign of deteriorating for now. The market seems to have anticipated this reality a long time ago. Markets move ahead of the actual events. The economy seems to be on the improve and is yet another reason why the bulls are not shy to buy on any weakness.

So what are those headaches for this market that, for now, don't matter. Well for one, we have strong negative divergences on the daily index charts across the board. It's not just one index, it's all of them. Some worse than others but they're all bad. Then we have focus on overbought conditions. The 60-minute short-term charts, the daily charts, and the weekly charts are flashing mostly 70+ RSI's. Not a good thing.

When you think about all these negatives it is amazing the market hasn't utterly collapsed. The strength is unusual but it is what it is. When you combine overbought indexes on all relevant time frames plus negative divergences on the daily charts the market really should get smoked in the short term. I don't honestly know why it hasn't yet but it's a testament to the power of liquidity and extremely low interest rates. You need to see the proper reversal candle to get the market rocking down. I keep thinking each day will bring it but, thus far, the market has climbed higher. Stick with what's working until it's not.

Resistance now for the S&P 500 is at 1576. This is the old intraday high. Massive support at 1531 on price and then 1521 or the 20-day exponential moving average. The Nasdaq has massive gap support at 3200 on any pullback. The gap is huge and this level should be very good for the bulls in terms of holding price. The trend is higher. The short-term is very iffy with all the headaches I spoke of above.

Keep it light but keep some exposure.

Have a great 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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