Transports...Semis....Industrials.... All On The Improve....Market Still In Its Base........AAPL Bearish Behavior...Sentiment Unwinding

The market looked dead a few days back, falling hard day after day looking to make another run at key support at 2040 on the S&P 500. As has been the case for quite some time, the bulls found a way to keep the market from falling apart. Most of that was due to some good earnings reports, but mostly from the fact that the bears just never seem to get the job done when it's right there for the taking. There were clearly enough problems globally and technically here for the market to fall, but not to be the case. We bounced hard and are now back slightly above the middle of the range on the S&P 500 where all that matters big picture is 2040 and 2134. This evening we're seeing Facebook, Inc. (FB) and Whole Foods Market, Inc. (WFM) along with Wynn Resorts Ltd. (WYNN) take hits lower on their reports, and with the sixty-minute charts needing to unwind some, maybe we'll see some selling tomorrow.

There's no guarantee, but the futures are down a bit, especially the Nasdaq. All this back and forth has to be driving traders crazy, but this is not unexpected, since this has been normal behavior for quite some time. The reason for the frustration is that there are so many head fakes to the up and down side. Time after time we get strong moves in one direction, and as we get near the big levels, the market reverses without warning, even though quite often there's no real news to cause such a reversal. The frustration adding up with neither side really trusting anything. Who can argue with that. So today was yet another day of hope for the bulls, but don't get too happy if you're bullish, since no one knows what the very next day will bring. The wild swings ultimately to absolutely nowhere continue onward.

If you take the time to study the weekly charts you'll see that many of them have unwound those overbought oscillators quite a bit while price held critical support. The S&P 500 has really unwound quite a bit, which is good news for the bulls. There are times when this amount of oscillator unwinding would have caused much-deeper price erosion, but since we're still in a bull market, price at 2040 has found a way to hold. The monthly charts are still horrible. Hide the kids on those, but at least the weekly charts are in better bullish shape. It doesn't mean we won't lose 2040 due to those monthly charts, but at least half of the problem has been taken care of. The daily charts, the key-index charts, have taken on more of a neutral to bullish look. Up and down in the base, but overall not bad. Nothing to get overly excited about but clearly nothing bearish, so the bulls can at least breathe a bit easier now that the daily charts held 2040, and the fact that we've seen solid oscillator unwinding on the weekly charts. The bull isn't dead yet.

Three sectors that have been a nightmare for the market these past many weeks and months, the industrial, transports and semiconductors have turned the corner off their intense bear-market runs. Strong gap ups with full candles yesterday, followed by solid sticks today, suggest that things are on "the improve." Not bullish yet, by any means, but hopefully after some backing and filling, their lows are in. If this turns out to be the case, it's going to be very hard for the bears to remove 2040 from the S&P 500, simply because the laggards are now improving. Even when they were terrible the bears couldn't get the S&P 500 below 2040, with force on a closing basis. If the other sectors continue to move back and forth, but hold their ground, and we get the recent laggards to move higher, the bulls should win the day with the breakout over 2134, but that remains to be seen. There is hope now that the recent bear-market sectors are looking much better on their daily charts.

AAPL, the leader of leaders is lagging badly and behaving poorly, but this too isn't too much of a concern if the market can get key sectors rocking up that have lagged badly. AAPL is important, but not so much that the market can't still rally. There have been many times in the past when AAPL went into a bear market of its own, but did not take the rest of the market with it. It's always one to watch. 122.00 is massive, key support, and if that breaks a test of 118.00 is quite possible. We would look for bottoming sticks around that area, hopefully, but let's see what 122.00 does in terms of holding. If AAPL can bottom soon, somewhere between 118 and 122, then the bulls will have that one big weapon added to their arsenal along with the recovering recent bear-market sectors just discussed. It's always important to watch AAPL. Keep an eye on 122.00 for the very short-term.

Sentiment is finally improving. The bull-bear spread is down to 25.8%, the lowest reading since last October, I believe. Last week seemed to do some real damage to the thought processes of those frothing bulls. Even the number of bears increased ever so slightly, which is really good news for the bulls. The bulls themselves also reigned in their intense-frothy behavior. Fear is starting to enter the picture now whenever we sell off for a few days in a row. Let's hope this fear continues along every time there's even the slightest bit of selling. Remember, fear requires action. Froth requires no action. People will get fearful a lot faster than any other market emotion, so it seems now that the longer we move laterally overall the easier it will be to unwind sentiment.