You could see that reality take place today in the stock market. There was every reason for the market to get crushed today. There was terrible news overnight from Europe regarding Greece, and some bad news right here at home as Moody's was downgrading our individual states. Not looking good financially for our country. It's a nice toxic mix for the bears to nail the bulls. The futures were getting slaughtered overnight. All of Europe was under severe pressure to the down side. Our futures are reflecting the carnage overseas. Our markets never recovered. It's understandable. We were down nearly 250 on the Dow in the first hour of action. From there the market slowly started to recover off the lows. The Dow finishing down only 108 points with the Nasdaq down only 9 points thanks in most part to Apple Inc. (AAPL), which reached up over $11 today.

The market could have easily crashed much lower today, but those too bearish sentiment numbers are holding things up for now, but some day that will all change. Eventually, optimism will rise enough to take away the buffer sentiment is offering for the moment, and then things could get very ugly for the stock market. It's important to recognize that we're in a bear market and not to get complacent simply because bad news isn't being treated as bad news for now. As long as the S&P 500 is trading below 1260, and that's clearly the case for now, then you should not even think about this market from a bullish perspective. Holding up for now, for sure, but even with great sentiment figures helping, it's still not close to doing anything bullish technically.

We'd all prefer a bull market, but you can't let emotion rule your thinking. There's a small window here for the bulls in terms of things not falling apart, but there's nothing bullish bigger picture technically, nor fundamentally at this time. By the time sentiment is no longer good for the bulls, it's hard to imagine global fundamentals getting much better. There's some time for that to happen, but there's nothing encouraging coming out of either Europe or the United States these days. The bigger picture trend is still lower.

The financials continue to lag, and then lag some more. The sector led the market down again today, and by now this should be no surprise to anyone. After all, most if not all, of the problems are stemming from default, or recessionary-like reports. Our own country is watching the economic reports come in more and more recessionary while Europe is threatening defaults all over the place. The banks are caught up in it no matter where you turn.

The biggest threat on many levels continues to come from housing headaches. More and more are losing their homes, and the banks are stuck with an onslaught of foreclosures. There is no cure for this massive problem and as long as it continues to worsen, which the reports say it is. The financials can rally, but really can't go very far to the upside. They may be worth trades at times, but they're not worth more than that. I wouldn't be investing in any of these stocks for the bigger picture. Someday, of course, but for now they're just not showing any inclination to be able to rocket higher with the all the overhang they're dealing with globally. Tougher times still are likely dead ahead.

The market is bifurcating here. Tech stocks, as usual, are the place to be when this market tries to move higher. The market is not anxious to run higher in too many other sectors of this market, but the tech stocks continue to massively out perform. The Nasdaq made it all the way up to its 200-day exponential moving average during this rally while the S&P 500 could not even clear its 50-day exponential moving average.

Tech is always the frothy place to go, and even in a market such as this, which is bearish, the tech stocks, or the most innovative companies, are getting the bid. Don't fight the tape as they say. If the market eventually just gives it up I'm sure the tech stocks will take a beating as well but in this particular sentiment aided environment, tech is the way to play if you want to try long side strategies. Remember that these stocks are also the most volatile, have the highest beta, and traders love to try and nail the biggest and fastest movers, and tech is the land of all of that, so no surprise if this trend continues. It probably will for a long time to come.

Strong resistance remains at S&P 500 1216/1218 with good support down at 1175. Below 1175 we start looking at S&P 500 1150, and then a big confluence of support between 1120/1130. Finally, the line in the sand at 1101. If that goes someday you'll see a big free fall lower as this low has held now for more than six weeks. The bear flag holding this market for now, thanks again to sentiment issues, is large. It's also getting old in time. That combination would bode very poorly for this market should 1101 go.

The bears would pile in hard, and a long squeeze would come into play no differently than your classic short squeeze we often see when resistance is broken.

The bulls will run for the hills on a move below 1101, especially on a closing basis. If we can ever get through the 50-day exponential moving average currently at 1216, the market would run back up to 1235. Stay nimble. Play lightly both ways. The bear flag continues between S&P 500 1101 and 1235 for now.

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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