The market has been relentlessly higher for nearly two full months. Such a long rally without a decisive pause always ends in mayhem. Meanwhile, do you think Facebook is over pricing itself?

The combination of the quick start and afternoon pullback resulted in a doji candle.

We're officially in crazy town, and as expected, now we are seeing sentiment change.

If you're an index investor, you can do very well by using this tool to measure "fear" in the market.

Earnings season hits full stride this week, and it could be a very critical week for the bulls.

The market has gone nowhere over the past few months. And the trading conditions have been anything but easy to manage.

The increase in volume was excellent to see yesterday, and that increase in volume added further conviction to the bullish move higher past 1280 resistance.

I argue in favor of a bullish advance past 1301 resistance and this week could very well be the start of that move. 

The euro crashed again yesterday. After a brief period of stabilization, the euro formed a bear flag then broke decisively to the downside.

While I believe we are headed higher over the next three weeks, the bears have a funny way of changing the tide of the market without any detection.

I am going to keep my bullish outlook, but the indices need to find support immediately.

The market took a nosedive yesterday, directly to 1197 support. In addition to the plummet, and sadly for the bulls, volume was high.

Yesterday's additional volume likely came from a few bullish traders who rushed in expecting 1225 to hold, then closed those positions once 1225 support was taken.

If two of these three trends don't take place, neither will a market rally.
 

During strong trends, leadership stocks, sectors and indices are often defined by large rises on above average volume and miniscule declines on low volume - while the opposite is usually true during bear trends.

Financials have clearly driven this rally. And it makes sense - this rally is being built on a bailout designed to help banks.

Bank of America (NYSE: BAC) missed earnings estimates badly, and tech behemoth IBM (NYSE: IBM) came in light on sales.

The latest rally in the market was initiated with optimism that Europe would come up with a plan, quickly, that increases investor confidence, avoids default and recapitalizes banks.

Tuesday's late reversal had investors worried that a Hope Rally was fading quickly. But we should note that stock price moves always have a lot to do with expectations and anticipation.

The market took a pause, finally, and declined roughly a percent yesterday. At the open, the indices gapped down by more than 2%, but a last hour surge by buyers recouped a large portion of those loses.

Volume was below average. And the hardest hit areas were financials (that's why we own ProShares UltraShort Financials ETF (NYSE:SKF)) energy and industrials.

The market continued its incredible rally higher on Friday. Volume increased as the bulls tacked on another gain and the SPX finished 5% higher for the week. More importantly, SPX was able to rally past 1175 again.

After the burst past 1175, buyers wasted no time and took the SPX all the way up to 1220 resistance. But much like in the past, 1220 could not be broken.

Over the past month or two months I have stayed bullish, but at the same time I refused to believe SPX could rally past 1250 without government assistance.

The market blasted higher yesterday and the bulls recovered a lot of lost ground. The volume yesterday wasn't all that strong, but the bulls were able to overcome resistance zones. SPX blasted 3% higher, which put it way past 1175 and took the index all the way up to 1197 resistance.

Now that 1175 has been reclaimed that area needs to be support. I didn't like that SPX went below the 1175 level on Tuesday, but it recovered fast enough to give the bulls a second chance at 1250.

The market was slammed yet another time yesterday. Although unlike Thursday and Friday, the indices recovered into the close.

Once again financials led the charge lower and the big banks like JPMorgan Chase (NYSE:JPM), Bank of America (NYSE:BAC), Goldman Sachs (NYSE:GS) and Citigroup (NYSE:C) were down 3%. Energy and technology components were also hurt and stocks like Microsoft (NASDAQ:MSFT) and IBM (NYSE:IBM) were down 1% and Exxon Mobil (NYSE:XOM), Apache (NYSE:APA), Continental Resources (NYSE:CLR), which we're short, and Halliburton (NYSE:HAL) were down 2%.

You're familiar with "indicators" - the many and sundry data points that analysts point to as evidence of everything from an impending stock market crash to the end of a bear market in pork bellies.

The market was slammed again on Friday. Volume was light, due to the holiday, but the indices slipped by over 2%. Once again financials led the charge lower and the big banks like JPM, WFC, GS and C were down nearly 5% while BAC lost 8.3%. And the worst of the decline is not over.

The FHFA sent lawsuits to 17 banks. And the amount that was sought is in the billions of dollars. But the fear on the street is that if banks pay one settlement for a fraudulent mortgage, hundreds more cases will follow. And with $5 trillion in questionable loans, the banks are on the hook for a large sum of cash.

The market slowly moved higher yesterday. The indices actually started deep in the red. But a midmorning ride down to 1197 stabilized SPX and it rose from there to eventually hit 1220 resistance by late afternoon.

The SPX slid nearly a percent after it tagged 1220 resistance, and the decline occurred in about five minutes. While the bulls were not able to overcome 1220 yesterday, they likely established 1197 as a support zone again following the morning bounce.

The market rebounded in a strong way last week. Over the past three weeks, I cautioned against going short - it's not because I wasn't bearish or that I am super bullish. I had a long bias because the indices were oversold at strong historical levels of support.

While the indices did not sink lower. I really cannot say that the indices jumped higher until last week. And even now, although I expected another ride to 1197 there isn't much of a chance of a sustainable break out past that. The 1250 resistance will be a beast, and barring any stimulus plan or political intervention (as if those idiots could act fast) there really is not much of a reason for SPX to blast any higher.

The market blasted higher yesterday. Volume soared as the indices climbed over 3% in a persistent rise. The accumulation was great as technology led the charge higher. Additionally, the indices were able to put in a big day without the help of a falling dollar which was a positive sign of market strength.

Yesterday I wrote about how the bulls needed a big day and also how I thought the bulls were going to get it. The SPX was near a sturdy support zone, and a bottoming pattern was in place. All the bulls needed to do was pump the market higher and then SPX would be on its way to 1197.

The market salvaged a gain yesterday, but it was an unenthusiastic win for bulls. Volume was up, but that was about the only good thing I could say about yesterday's price activity.

Banks and oil stocks sank and the rest of the market muddled through the afternoon in an uneventful session.

In the morning, pre-market, the indices were poised to record a huge (positive) day. And the indices, along with just about every stock (up to down volume 15 to 1) was up in the morning.

The market broke free, momentarily, of 1197 resistance yesterday morning and pushed over 1% higher to start the day. But right around 10:00, most indices peaked, and by lunch they traded with minor losses. While the indices were able to bounce off those lows, most still finished flat on the day.

More important than the flat session was the inability of the bulls to keep the market above 1197 for the second time this week. Additionally, all major U.S. indices formed long wicked doji candles, which do qualify as a topping candle.