So today we had Mr. Bernnake speaking in front of Congress and they were asking the usual ridiculous questions about quantitative easing and how long he intended to keep it going, etc. Would he stop soon? What were the parameters he was using to decide when to stop, and so on. He gave perfect answers. He said if things stay bad he'll continue to flood with cash. If things get really good he'll slow down. Send in the marching bands. Wow! Really? The market eventually sold off. Folks on television saying it was due to the Fed "confusing" people with his remarks. Really???? You think that's why the market sold off? Well folks, the reason the market sold off was because it was brutally overbought with sentiment readings getting well into the red-flag area. The market was simply looking for any excuse to sell as there were basically no buyers left.

Markets sell sometimes, even in a bull environment. Yes, it is important to unwind overbought and to unwind sentiment. The market understands this. It does what it has to when it has to and there's nothing and no news that can take place to stop it. So today was the day the market said uncle for a little while. Nothing to get upset about. Let it fall. The bulls should root for some deeper selling. I know I am, but we shall see just what the bulls are willing to surrender in the days and weeks ahead. Today was not a bearish day bigger picture, but it was a key-reversal day for the short-term. At least it should be. It doesn't change the fact that we're in a powerful bull market. Don't lose sight of the bigger picture. If you're very bullish on the market, root for lower prices for a while.

The moves lower were led by the stocks that have been on high poles. Some real beatings in those stocks. It had to happen at some point folks. You can't stay that overbought on a high pole forever. Stocks like Green Mountain Coffee Roasters Inc. (GMCR), Google Inc. (GOOG), and Priceline Inc. (PCLN) to name just a very few. There were literally hundreds. These stocks have huge volume sticks to go along with the selling meaning they are going to need a decent amount of time to unwind further and recover.

I'm very happy about these reversals as they will allow for entry down the road. The ley today was the size of those candlesticks. Massive off the top with most of them engulfing yesterday's up-stick, and some of them engulfing many day's worth of up sticks. That's normally bearish for the short-term as big money won't support the retail that tries to buy them back up so they can bounce some but won't likely blast higher for a while to come. Again, this is healthy and necessary. At some point it becomes impossible to even think about getting involved with them. This will let the air out and allow unwinding, which is what they so desperately need.

So now we need to look at the key-index charts to understand where support is sitting. We take a look index by index so let's start with the S&P 500. The 20-day exponential moving average sits at 1631 while key-horizontal support is at 1600. Plenty of down side available if the market wants it. Now we turn our attention to the Dow. The 20-day exponential moving average sits at 15,097 while the 50-day exponential moving average is at 14,785. Finally the leader, the Nasdaq. The place froth goes to live and die at times. There's strong 20-day exponential moving average at 3412 while massive gap support sits at 3370. If the market could move down to these levels it would be a great thing for the bigger picture. We shall see.

One day at a time. Look at this evening's charts for deeper understanding of today's action.

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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