So we wake up this morning to some very nasty futures. When I went to bed last night fair value was green. It seemed as if the futures were saying we would try for a breakout. This morning told a very different story. A major blast lower as Europe got crushed overnight. Fears of a Greece fall out. Germany down roughly 500 points in two days. We followed their futures lower in a very big way. We gapped down hard and never showed any strength or fight the rest of the day.

A gap and run which is exactly what the bears needed. The bears were up against it heading in to today's action as the S&P 500 was nearing the 2119 breakout level. The bears responded with a terrific technical day for themselves. A large, very nasty gap now in place. A wide-open large gap that has to make them feel very good about themselves. The bulls have to accept that things got away from them, and with this open gap in place it's likely we won't see them getting too aggressive any time soon. They know these large gaps are just too tough to take right back. Bottom line for today was the bears got the job done. A knockout, but I'll discuss further what it really means. Is it something bearish or just an illusion for now?

When markets sell we see emotions climb very rapidly. So was today really a relevant day for this market? Not yet. All it did was put us back in the range. A bit more towards the bottom of it, but since the range on the S&P 500 is from 2119 down to 2045 you can see the market is still nowhere. It's important not to over react too quickly. Just yesterday I will bet most bulls figured a breakout was imminent and inevitable. Today it could feel more opposite to them I bet.

Same goes for the bears. They must have thought they were toast yesterday. Today I'll bet most feel they are in complete control of things. The game changes faster than you would think. Today was nasty, but not deathly. There is no real damage until we start closing below 2045 on the S&P 500. We're still ONLY in noise territory. Each side is able to defend their number. Both sides have had many chances over five long months to take control. Neither one has taken control. Yes, maybe this will be the one time. But don't count on it. See it and respond.

A market such as the one we're in now is very emotional, which can cause all of you to do things you'll regret. Know your levels and then respond. 2045 is key. 2119 is key. All else is noise no matter what a given day feels like. Your best position is cash. Lots of it. Most of you don't want to hear that and will never play that way. The gambling casino just too tempting. If you must play, at least use weakness. The market could use some longer-term selling, but we know how useless it is to think that way. If we fall further and get bottoming sticks you can enter back in to longs. If we break down you can short on the back test of the 2045 area.

For now, you should try to keep your emotions in check and play the levels, not a given bad down day. We've had plenty of these and were ultimately buying opportunities. That may not be the case this time, or then again, it may be. We'll know by the candles that get printed on any further move down. The market will give hints. Let's listen with an open, unemotional mind. Remember, today was nowhere near a bearish day. A pullback day. Not a bearish day. If we collapse through 2045 we have a real problem. Things won't be bullish, but we're not there yet. Keep an open mind.

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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