When a market is getting ready to correct for whatever reason, the financial stocks would be one of the leaders to the down side. Yesterday surely looked as if that was the case not only for the financial stocks, but for the entire stock market. Today, we saw exactly what we shouldn't see if that correction was upon us. Lost key moving averages were taken right back and in many cases, on large volume. Some of the financial stocks had huge ramps higher. Best candles in many months.

Again, this should not and would not happen if a major correction was upon us. With the bull bear spread now likely over 40% what in the world kept this market up? Well, you can make an excuse for the jobs report if you like. It was dynamically better than expected. That, however, should not matter when you're dealing with an all-in situation, the bulls being the ones who are all in as evidenced by the enormous spread differential. At least I would have thought so.

The market blasted higher. The financials, and just about everything else, exploded. Volume was solid. Nothing makes sense based on the spread. Or does it? Maybe it's what I spoke about a few days back. We have never seen the spread of this magnitude up against the likes of the Fed, and his liquidity machine. Add in zero short-term rates. So maybe, for now, that combination is still able to trump the spread. I have to say that it honestly still shocks me. I would think nothing could overcome that type of spread but clearly I was wrong for the short-term. It'll have to be worked off in time, but maybe the level of the spread needs to get much higher still. For now there's no correction upon us. I still believe it can happen at any time but it's not here today.

My tendency is to be very conservative due to the temptations that can take your average trader down. Keep in mind that the great majority of traders lose money and eventually leave the game. I have learned that greed and a disrespect for the market can kill you financially. And in an instant. Let your guard down for a moment and down you go in a ball of flames. I got this wrong. I based my decision that a correction was upon us on the spread at 39.6%. Especially with the bears at under 16%. My conservative nature said the market can always run higher first before correcting, but it would be safest to go cash or mostly cash in order to keep folks from getting hurt if this pull down from yesterday continues on. Today we exploded back up. Sorry. Safety first often hurts me. Can't teach an old dog new tricks. I guess I don't want to learn. Stick with the old-tried-and-true. Best to be safe and wrong than unsafe and destroyed. Just my way. Oh well. At least I didn't short. I stick with the bigger picture trend in place. Anyway, that's the reason for my getting this wrong.

I have no idea what's next to be completely honest. The spread bothers me terribly. The market has those two opposing forces going at each other. I believe that someday soon the spread will win out. I don't know when however. It scares me to be too invested. Being all cash, or almost all cash, isn't well received. No engulfing sticks yet that say we can still go higher. Doesn't make sense to me, but that's what it says is possible. Don't get too aggressive. Don't short a bull market would be my best suggestion. Some exposure I gather is fine, but again, I wouldn't get overly aggressive. 1730 remains key long-term support.

Have a great weekend!

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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