market down off of overbought daily charts. We are overbought on the oscillators and on pure sentiment readings. The market wants to sell but it still can't find a reason to do so in this holiday season. Timing the pullback, whatever it may look like, is very difficult here as the bigger picture remains solidly bullish. Where will the catalyst come from is the real question we're all asking. It didn't come from a bad employment report some weeks back. I thought that would do it.

There were some earnings reports that had a chance to do the trick. They didn't do it. Good economic reports from the Philly fed sure didn't help the bears nor did a good CPI and retail sales report. It seems even bad news wasn't getting the job done. So what will? Maybe nothing in the end. Maybe it just snaps because it can, but again, there is no exact science. You can only see how the market is struggling for big up days. They really aren't happening any more, but it is still grinding, splitting days of out performance between the Dow/S&P 500 and the Nasdaq.

Lots of back and forth there, which is exactly the action of the market. Back and forth. For now, you should keep some mild exposure on the long side overall. If you want to short, be careful. Nothing big either way is the real point here. Move through this market day by day unfortunately. Nothing is easy here for longer time period plays. It is what it is, folks, with no end in sight.

The really good news continues to be rotation. The market refuses to just spit the bit. If one sector drops there's another one moving higher. A revolving door if you will. As one gets overbought it gets sold. If one gets oversold it gets bought. Different sectors getting love at different times in order to hold things up as the deep froth stocks continue their overall pullback phase. As long as folks don't want their money earnings next to nothing in the bond world, it seems to me there should be nothing more than a normal pullback over time, and that the overall direction of this market should continue upward.

It's important that all of you understand that markets are always changing and evolving. Some periods are easier than others. Once we made our measurements in this market it has become increasingly more difficult to find lots of strong set-ups. Solid bases are forming and they often need more time than we'd like to believe possible, and this can cause frustration if you let it get to you. There are periods where it's clear. We can be either in a real continuous up trend, or down trend, and then there's this market where it's a grind at best with little tiny candle sticks.

Those phases can last many months. After a while it seems like it'll never end. You have to learn to adjust mentally to what's out there at any given moment in time. If you have the same mind set all the time you are in for trouble and will simply under perform if not get outright hurt financially. Realize where we are and accept it, and you'll be fine from all perspectives. Financially you'll hang on to what you've made, and mentally you'll play more appropriately, meaning less trades and be more patient with them.

Just expect the market to continue to chop around in a range with different sectors performing better at different times for a while longer. There is no way to know exactly how long this process takes, but patience is the key along with not playing too aggressively. Three positions are about all you should be in for now. The more you do the more it is likely you will take unnecessary losses. Slow and easy for now is absolutely the only way to survive. Lots of stocks have taken huge hits few would expect as the froth is being taken out of some of those high flyers. Be more than careful with these types of plays.

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 constitutinginvestment advice. Trades mentioned on the site are hypothetical, not actual, positions.

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