The futures began to fall not much after the market had closed last night. Slowly but surely the selling began. But there was nothing that made you believe we were about to blast up again, since we also closed a few points below 1700 on the S&P 500. Not forcefully below, but the churning the past few days just above 1700, and then they closed slightly below last night, didn't give you a warm and fuzzy feeling about the market heading in to today's action. The market gapped down some, and then headed lower with some force, until it got to the 20-day exponential moving average at 1684. Buyers naturally came in there as this was only the first real test of the 20's. In a bull market the bears aren't likely to succeed at removing critical support levels on the first try, although it can always happen.

It didn't happen today, however, as the bulls came in where you'd think they'd defend and had little trouble doing so. The problem for them is it wasn't a rousing move back up, and with multiple gap downs now in place, the bears clearly have the edge on the market for the short-term. It means sustainable upside, which I have spoken about quite a bit lately, will continue to be very difficult for the bulls for some time to come. It doesn't mean market death for the bulls. It simply means what I said it does. It won't be easy to get huge move up after huge move up for a while. Nothing wrong with that as it helps the market unwind those nasty looking daily, weekly, and monthly oscillators. Some additional selling, in fact, quite a bit more selling would do wonders for this market, but we shall about that in time. For now we saw the action today one might expect after failing to hold on the key support at 1700 at the close yesterday. Nothing bearish whatsoever. Just normal, expected selling.

We got the important sentiment readings today on the bull-bear spread. The bulls aren't happy about this reading. It's not at a critical level of over 35%, but it is at an unpleasant bull reading of 33.1%. Bears back below 20%. I never like to see that and bulls back over 50%, although not ridiculously so. The 33.1% spread is nearing the topping spread level of 36.4% seen a month or so ago. The selling has actually already begun ahead of any reading at 36.4% and that's no shock as once you get above 30% the selling can kick in at any time. Add in overbought weekly and monthly charts along with negative divergences abounding just about everywhere and it's no shock that 33.1% got the market moving somewhat lower.

It is always best for the bulls if the spread is below 25%, and if at all possible, below 20%, although anything at 25% or below I consider just fine for the bullish case. Adding in sentiment headaches to everything I stated above makes the journey in the short-term a bit more favorable for the bears but it does not mean the start of a bear market. Not by any stretch of the imagination, so don't take this selling or any further selling in the short-term to mean the market is totally doomed. It is not by any means, although a bunch of percentages off the top would be nice for the bigger picture. For now, sentiment is a problem, although a bad week such as we're having now should help things for next week. Hopefully, back at least below 30% again. It would take several weeks of selling to sideway action to get the number down appreciably.

1684 is key here, folks, for the S&P 500. It's the 30-day exponential moving average, and if the bears can eradicate this level with a bit of force, the market should take a much more substantial loss. It would be great if that occurred as it would allow for safer entries not to mention great leaders having fallen quite a bit. When they would put in bottoming candlesticks they would become buys again with a much higher risk reward probability. Take it very slow from here. The market won't be down every day, but now the Sp has strong resistance at 1697. The race for who wins out first is on. The bulls clearing 1697 or the bears clearing 1684. We shall see how it unfolds.

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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