The Nasdaq has been lagging for the entire year and that's simply because of the higher P/E's associated with those four-letter stocks. In a declining-global environment within a forced fed-bull market the majority of the big money doesn't want to get caught in a bad, Nasdaq earnings report, and get slaughtered so that big money plays it safe and goes to the lower P/E, higher-dividend world. The result is under performance in the Nasdaq, and out performance in the S&P 500 and Dow. The Nasdaq got hit by a threesome of bad reports last night. Google Inc. (GOOG), Starbucks Corporation (SBUX) and Microsoft Corporation (MSFT). All three hit hard today. That trio, which is very heavily weighted, took the QQQ's down very hard today, although there was the usual strong move off the lows as the day wore on. The bull market was very much intact with zero signs of topping out, although there was some technical damage on the Nasdaq.

I'm sure it'll heal up just fine in the days and weeks ahead as the S&P 500 tries to break out over 2134. The damage done to the leaders, such as MSFT, SBUX, and GOOG will take time to heal up. Could take many, many weeks, so you'll need patience in that part of the stock market world. That doesn't mean there aren't a tremendous number of great set-ups out there that can work their way higher. The market is very healthy, but many will say things are bad now, because a few stocks got hit hard and didn't really come back all that much. There were plenty of good earners that flew up today, so it's not all bad, although the earnings season overall has been pretty bad. That said, we all know that doesn't matter anymore for the stock market. The only thing that matters is Fed Yellen, and she'll be sure to try and keep the market up through the elections. The bull should last until they're over. So today was actually a bullish day, since most of the areas of the market performed well, while the big laggard, known as the Nasdaq, followed the usual script. Nasdaq is down for the year, while all else is doing just fine.

My big concern is the ever growing world of froth and complacency. When the Nasdaq was at the lows today, down over seventy points, the VIX was red. No fear anywhere to be found. Complacency is jumping big time. That's never a good thing, for soon it'll get to a point where things will snap as they did last time when we fell between 14-22%, depending on the index. We're not there yet, but we're probably approaching the 30% spread, and once there, things usually ramp even faster. So now I have that concern to deal with on top of the negative divergences that are everywhere on all the index charts. Daily and monthly charts are nasty. I know they may never matter, but I still concern myself with these things as they remind ME NEVER to get complacent. Once I do, I've joined the herd and even though that may be the prudent thing to do, but it's just not something I'm comfortable with myself. I always want to be against the herd, even if I join their party just a little bit. I'll never jump in completely, even if it's to my detriment. Have to play things appropriately, but even that appropriateness isn't working any more. So now, I'll focus on those two, normally-bad things for the market bulls. Complacency and negative divergences. Of course, I'll have longs as well, but I will do so gently.

So where do we go from here? Likely much higher into those bad divergences. Some test of 2134 seems imminent, but you never know for sure. The way the market held today was very telling, and should allow for much higher prices to come over time. 2068 is strong support. I don't know why I bother to mention it, but you need to know anyway. You just never know. A close below would be surprising, and would make the bulls a bit nervous. On the upside, we focus on 2116, and then finally the breakout level of 2135. Once we clear 2134 on a closing basis it's all blue sky. The market will set its own new numbers of resistance on the way up from there. So really, it's about 2068 and 2134 for now. I think 2134 will win, but never let your guard down, or, in other words, don't get complacent. There's that word again. Recognize things are good, and play accordingly, but be mindful and respectful for all possibilities.

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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