A breakout is a breakout and the S&P 500 did close above 2085. It doesn't meet my personal criteria of a breakout, which means a move above by at least a half percent, but you never argue with an index breaking above an old level of resistance, even if it didn't do it forcefully. The only problem with this five-point move above 2085 is we're coming off extremely overbought short-term conditions, thus, we could lose that level right back in the short-term. If we do it's not the end of the world, but just be aware that we're still over 70 RSI's on all the short-term index charts after having readings that averaged 80 during the trading day. The markets overseas were higher after more bail out dollars were handed out in the Euro zone.

More bailouts equate to more froth, which means higher futures, and, thus, we were off to the races today. Not quickly, but after a little time the momentum picked up allowing us to clear 2085. We held slightly above the rest of the day with a close off the highs as we started to unwind those very overbought conditions late in the day but again, holding above 2085 at the close. So now it gets more interesting as the bulls will want to try and hold 2085, even though we are overbought. Can they do it? I never say no to the bulls, but it won't be easy as there's more oscillator unwinding to go. If we stay overbought the unwinding will be that much harder in time. In bull-trends you can work off overbought with little price erosion, and that will be the goal for the bulls short-term. A solid day for them. A bad day for the bears. Nothing unusual there even we never really seem to go anywhere bigger picture.

Housing starts are exploding due to those low rates the Yellen has held in place seemingly forever. An unintended consequence can be a housing market that gets too hot due to those low rates for folks who really shouldn't be buying based on their financial situation. Sound familiar? It should. This reality will likely prompt her to speak from a more hawkish perspective when we hear her latest speech this coming Friday. If you blow up a bubble they will come. And come they have, and I'm quite sure she's not happy.

I believe Ms Yellen would even like to see the market cool off some. She had some of her fellow Governors speak last week, saying they're worried the market isn't taking the rate hikes seriously enough. They want things down some. They know the low-rate environment bubble is starting to get out of hand. Her speech this Friday will be extremely interesting. I doubt she'll talk as if it won't occur, but she'll still be sure to tell us all that nothing on the aggressive side will be taking place any time soon. She'll talk data-dependent nonsense. Same old, but I do think she'll want to let us all know that her desire is to raise a bit more, and to do so sooner than later. Friday will be a very interesting day.

If we hold above 2085 we start to think about the latest high above that at 2111. Prior to that it was 2116, so there's a cluster in that five-point range. Beyond that lives the old high at 2134. While things look favorable for the bulls the daily charts, and especially those monthly charts, do have negative divergences. Maybe they won't matter, but they have to be respected, and, thus, make sure you give it the respect it deserves. If the bulls can fight their way through those negative divergences, then that's great. We take it a day at a time now. Don't get too aggressive, at least not until we get some unwinding short term, whenever that occurs.

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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