Why? Because the 60-minute charts, which were oversold are no longer oversold, yet there was no upside action as things wound back up. You want to see the market blast up from oversold on those 60-minutes charts. We went from stochastic's below ten to over sixty, yet the S&P 500 wasn't even higher today. Ominous at best. This is what happens in reverse in bull markets. We get overbought yet things unwind with very little price depreciation. With this move showing almost no price movement to the upside the bears have the bulls where they want them. No excuses from here.

Support isn't too far below before there's an open channel to that 1040 level yet again. Too many knocks on the 1040 door and she'll give way. If it gives way with force the head and shoulders pattern is in play. Measures to 860. Let's hope we don't have to deal with that. The slightly up open we saw today tried to hang in there and things started to move up nicely before the bears came charging in and kept the bulls from working their way towards resistance at 1092 to 1105. Never got close to 1092 let alone 1100. It's starting to look like 1100 may not be seen for some time. Let's hope that's not the case. With the close at the lows for the afternoon the bears can now pounce on the bulls. Next few days will tell that tale, although, let's hope the jobs report on Friday keeps the bears at bay a bit as they show some fear that the Government will throw out some interesting numbers. You get my point.

Another reason to not believe everything you hear is simple and plays out in front of our eyes every day. For instance, the Government numbers said consumer confidence was at a two-year high. Really? Then why is everyone running in to bonds and avoiding the stock market? Did you see the iShares Barclays 20+ Year Treasury Bond (TLT) today? It doesn't say there's a whole lot of consumer confidence, now does it! Folks are flocking to 20-year bonds and very low rates. If folks don't see much for twenty years, is there really a lot of confidence? I think not yet they tell us things are great. Makes you wonder when the nonsense will stop. When will the lies go away! Bottom line is consumer confidence in our economy is showing multiple year lack of confidence. It's not good.

So, now we look for support to hold or not and to identify where those levels are. There is one more support level between today's close at 1074 and 1040. Last weeks low at 1067 is that number. If we lose 1067, and that looks likely, then there's an open channel down to the quad bottom at 1040/2/4. If we lose 1040 there's really nothing much for quite a ways lower. The bulls know they must defend 1040. If that goes away you'll see a long squeeze which is no different than a short squeeze you always hear about when markets are flying upward. The longs will run to get out below 1040 and this will fuel the short side of the trade.

Remember please, that this pattern has taken six months to unfold. If 1040 goes away on the S&P 500 then things will accelerate in a big way. There's a 180-point potential measurement. A day at a time if we lose 1040, but the market bulls know that if 1040 goes away, so do they. On the upside the bulls need to clear through 1099, which isn't happening any time soon unless the completely unexpected shows up.

The market is weak and acting poorly. Never good to unwind, like I said earlier, and not get any price appreciation. This lines up with bear market behavior, but the one thing we all have to take out of this market is this, you don't get overly bearish or bullish until critical support or resistance gets taken out. Things look bad but they're not truly bad until 1040 goes away with force. So hold back your emotion and make sure you see the move and not anticipate it. Anticipating often causes major headaches. While today was bearish, you shouldn't become a full fledged bear until 1040 goes away with force. All that said, you should be aware of what's setting up and take appropriate action should the market break down.

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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