Despite having spent a tense 12 hours looking over the edge of the cliff Monday and Tuesday, the S&P 500 managed to close above the August low yesterday and keep its 2-1/2 year pattern bullish - see Figure 1. While it's still only mid-week, and volatility remains inflated a move back above Monday's high of 1133.50, according to IBTRADE Chief Market Strategist Jay Norris, would go a long way in alleviating the bear pressure and put speculators who shorted it over the last 3 days underwater.

E-MINI

E-MINI S&P 500

Since the launch of QE I in the late winter of 2009 not only have financial markets such as the Euro and Aussie shown a 80 plus percent correlation to the S&P 500, so have commodities such as crude oil and gold. The S&P 500 is the alpha market right now, according to Norris, and that isn't about to change just yet.

Jay Norris offers Live Market Trading Exercise with from Monday to Thursday. 

The S&P 500 is in fact an influential index and widely seen as a proxy for the global economy. Given the follow the leader nature of traders and markets a recovery now for this influential index would have a far reaching affect across the financial and commodities markets. There are always two sides to a market though, so a failure of the current day old rally could shift the direction of so many markets lower again. As long as the S&P 500 futures stays above 1075, according to Norris, the bears can't get traction.