Jack's Wrap - The Wall At S&P 500 1151 Holds For Now....

But won't forever in my humblest of opinions. We could very well pull back from here due to being overbought on the daily charts but in the end, I don't think the bears will be able to hold the S&P 500 from joining its brothers and sisters on taking out major resistance. There is money rotating and not leaving this market and that's always the number one sign of a market under accumulation. If a market is in bad shape, or distribution, then sector by sector starts to fail and lose support. In this case, we are seeing the opposite take place as sector by sector is being defended at support with rotational money coming in. (See Banking Index Chart (BKX) that shows a strong move in the Banks today, which are breaking out of an 8-month base this week. Bank of America (BAC) up 1.85%, Wells Fargo (WFC) up 2.04%, Citigroup (C) up 3.66% and Goldman Sachs Group (GS) leading the way with a 1.83% increase today.)

As long as this continues, and there's nothing indicating it won't, then we will be able to climb higher and get the S&P 500 over 1151 with force, which, of course, is critical to a breakout being for real. A small move over that churns is not what you want to see. You need to see a move over critical resistance and then you need to see that move up run hard and fast on big volume to confirm that it's for real.

We came in to today at overbought and ready to pull back. The futures were red overnight but started to come back up, moving to basically neutral as the day began. After churning some, we saw the bulls get braver and braver and thus the S&P 500 started making yet another run at 1151, falling just a few points shy at the highs. The Dow sold off a few times during the day and finished flat but the S&P 500 was up nicely as was the Nasdaq when all was said and done. The Nasdaq led all day and once again this shows a sign of real strength.

The Nasdaq is on a blue sky breakout thus the selling is coming at smaller rates and being bought up rapidly. We saw this quite a few times today. The Dow has been the biggest laggard of all and we saw this action hold true all day today, even when it was in the green. Basically, the Nasdaq is carrying the rest of the market on its shoulders and that was definitely the case all day today. Good action for the day overall but still no confirming breakout over 1151 S&P 500.

Sentiment is one of my favorite indicators as you know by now. Today, we got the update on that very subject and even with the recent gains in the market, bullish sentiment rose by only 1.9% since last week. The bull bear spread is now 21.3% and it usually takes over 35% before a reversal takes place. There are still just enough non believers to go around to keep this market heading higher overall. The numbers are now at 44.9% bulls and 23.6% bears for that 21.3% differential.

Leaders are continuing to hold strong bids and that's also a critical factor in understanding a markets true strength. The best news is that the secondary stocks and on down the line are also participating. New highs are rocking. New lows are dead. The advance decline line is wonderful. All the things you need to see that says things are healthy are taking place. Of course, things can always turn overnight but it's of the utmost importance that one never fights the message being sent in the moment. Yes, we have gone nowhere for a while overall on the S&P 500 and we really do need that breakout but I don't think it's too far away from becoming a reality.

Peace,

Jack