The market is doing what all good markets do, and that's to keep doing what the masses think it shouldn't do. The real bears just can't understand, and who can blame them, why the markets keep chopping higher overall. They look at all the data coming in from both here and abroad, and it just doesn't add up. They're right, it doesn't. Today we saw the Jobs Report come in well below expectations of 125-150K. The number was 96K. One would think, here we go to the down side. No fun day. Not to be. Nothing to get excited about, but overall, pretty flat after yesterday's big run up. The reason the futures didn't implode on the bad news was simple. Protection from Mr. Bernanke as now the masses are thinking here comes QE3. Yes, more easing from the Fed, both here, and throughout the Eurozone.

This fear of more easy money is keeping the bears from getting aggressive, and really, who can blame them. I would be fearful as well of waking up one day to the announcement of that program and getting my financial head handed to me. The threat is even more powerful than the act, and the Fed knows this, and thus, keeps reminding us of the probability of it should things continue to spiral down economically. Bad news is good news in this crazy game of Cinderella. So the market held in there today even through there was terrible news on jobs. The reasons for it are simple as I've explained. For now, we try to move a bit higher still.

Complacency is becoming a problem slowly, but very surely, my friends. We have been watching the bull-bear spread move higher each week, the spread coming into this week at 26.5%. It's getting close to red-flag number-one when you get to a 30% spread. In addition to that, we are starting to see some very low put-call readings near .60. It shows the masses are starting to get a bit frothy. Nothing out of hand, but clearly, the froth is starting to build. You know what happens when you get too much complacency, a nasty lesson to those who arrived late to the show.

It doesn't mean the market is imminently going lower, but it does mean we have to be on guard here for some type of pretty decent correction to come in the not too distant future. Timing it is impossible, and you don't short because of it, but you need to be on guard for when you need to raise a lot more cash and not be overly exposed. The correction to come can be quite painful if you're in too heavily. Just recognize and be aware of the fact that things feel real good, and that's why we're seeing more and more complacency. That will have to be corrected in time.

We hear from the Fed, as usual, next week as he talks about what he's going to do for the economy and what state the economy is in. I do not believe he will implement a QE3 program as of yet, but he'll be sure to let everyone know he will if need be. I don't know if the market will be disappointed if he doesn't do anything in the moment, but it may be the catalyst to get some selling. I believe he'll only do a QE3 program if the markets start to lose their 50-day exponential moving averages on the key-index charts.

It'll be interesting to see what he has to say, but I would not expect the big one. He doesn't want to deal with more debt and higher inflation unless it becomes an emergency based on a falling stock market, or a collapsing United States economy. For now, expect more threats, but no action. We continue to play some longs, but nothing too aggressive while the complacency becomes more prevalent. Don't over play your hand up here, but also don't front run the selling to come until you see the whites of its eyes.

Have a nice 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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