We need a strong push up next week to clear with force, but here we sit right at the 2030 breakout on the S&P 500. It seemed as if we'd never back test this far up where the two-hundred day exponential moving average lives. Bull market normally don't die easily. I expected this type of move over time, although we haven't cleared yet, thus shouldn't think about testing back up to the old highs. Let's not put the cart in front of the horse. We need to clear powerfully, and then the odds would increase dramatically that we'd pay a visit towards S&P 500 2134 or those old highs. The bulls are trying although some of the daily charts are seeing their stochastic's get overbought, but not the MACD's or RSI's so there's hope.

The short-term charts are also hanging out near or at overbought and doing so repeatedly. Any pullback off 70 RSI gets bought right back up. No rest for those bulls thanks to the covering going on by those overly short bears. Pessimism is a beautiful thing if you're a bull. The bears put themselves in this potential hole by taking on record, short positions. Nothing like a 14% pullback in the S&P 500 to get those shorts salivating at the possibilities. They'll get their wish someday soon, but I don't think that time is upon us quite yet. Soon. Not here. Early on next week is do or die time for those bears. They need bad news economically over the weekend out of China. Plenty going on there with reports Sunday, so keep an eye on those futures Sunday evening. Could be fireworks next Monday.

It's really important to take the time to study those monthly index charts. Hide the children before you do. They are truly scary, and will bring about the likely end to this six-year plus bull market. Never a guarantee, and maybe I'll be wrong, but based on what I'm seeing, the bulls basically have no chance longer-term here. The divergence is about as bad as humanly possible. There's simply no way to paint it bullish. You can fool yourself to say it's fine, but it's not. There will be a very nasty drop in this market, but that's still, hopefully, some months away as we go through the likely topping process of making new highs, and then doing lots of retests before the market breaks for good.

Bull markets do not end easily. A long process of distribution off tops, and moves back up on retail volume is usually the way. That whole process could take many months. I believe we're seeing the potential for one-final leg higher. I'm hoping for it so as to create the nasty negative divergence. Then you look for the proper topping stick followed by distribution off multiple topping processes. It's a drawn out, nasty process that gives hope, then pulls out the rug. Let's see if we can get a move to 2134 on the S&P 500, and, hopefully, higher in the coming weeks or months. It should take place, but nothing is guaranteed.

The daily and weekly index charts look fine for now. We could use a bit of unwinding first before the market breaks out with force, but we shall see if the bulls have the patience, or if the bears just cover up. I hate breaking out into overbought, short-term conditions, but overbought can stay that way for a while if the market wants something badly enough. Buying weakness is best. Do what feels right to you, of course. The market, fortunately for the bulls, doesn't have the look of the monthly charts on any other time frame for now. This, too, offers up the possibility of a retest of the 2134 S&P 500 highs. A move to 2150-2250 would be perfect. In order for that to happen we need decent news on the first trading day of November on the ISM Manufacturing front.

A sub-50 reading would show recession, and likely kill any attempt up to the old highs. But I think, somehow, the bulls can pull it off. Far from a guarantee, but we shall see. Truly a day at a time as we hopefully make out way back towards S&P 500 2134. A strong close over 2030 will be needed to confirm the breakout. So far so good as those frothing bears have shot themselves in the foot of the recent lows.

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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