When one studies the market it's important to study moving average crosses on all time frames, but particularly the daily charts. If you were to study the S&P 500 daily chart you would see the 20-day exponential moving average has crossed down below the 50-day exponential moving average. It's by a hair, but for now a cross. When the 20's at below the 50's that can often mean the market will struggle for appreciable upside action. It can also mean downside action can accelerate. It's never easy to tell when the cross is so minor, such as it is now. The reason for wondering about it now though is easy. The cross up took place in early March. We're now in mid-October. Over seven months above with the action mostly on the positive side of the ledger.

To see a cross down after seven months is a bit scary, unless the bulls can quickly take it back, meaning they need some good news and they need it fast. As days move on, the cross will become more severe if we don't get a blast up, and the further the split the more difficult it will be for the bulls short to mid-term. If the market doesn't blast off soon the spread will be such that the pressure will mount to the sell side. Remember, this occurrence is the first of its kind in over seven months, and that should not be ignored, although few will mention it. Don't ignore it. Don't panic, yet, because of it. We all know that a loss of 2102 would be the breakdown that hurts the bullish case in a very big way. So keep it in mind, and if this cross down is for real, the 200-day exponential moving average at 2102 will be history. We'll know in the not too distant future.

So what might be the mover of this market short to mid-term, and what should determine the cross of those 20's and 50's? Probably earnings, and they get serious starting this evening when two very important stocks have their numbers come out to the street. International Business Machines Corporation (IBM), and the very bloated Netflix, Inc. (NFLX), and its 308 P/E. If both can raise guidance they can carry the market back up. Even NFLX can go higher with that crazy P/E simply because we're in the no-reality-zone of this bull market. No one cares about P/E's until they do, and they do when a bloated pig like NFLX misses on their report. If there's no miss, there's likely only higher prices. After these two reports, along with UAL this evening, the big boys and girls start to come in with more frequency, and that's what will ultimately decide the fate of those crosses, and whether they worsen or cross back up before the spread gets too wide.

We have had eight straight quarters of declining earnings, and with the bar now set very low by all those declines, it shouldn't be that hard to beat the numbers that are expected. The beauty of miss after miss is the bar gets set so low it's almost impossible to keep getting it wrong. We'll find out starting this evening if those lowered expectations can finally start to be exceeded. A very important time for this market as we hit this critically important earnings period. Keeping it light.

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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