Friday was the big opportunity the bears had been waiting for, really nasty employment data to go along with a huge gap down. There it was. All for the taking. Seize the day you bears! No dice. They seized nothing. They let it get away. They had their knee on the throats of those bulls but let them up again. Give the bears credit though. They tried again today. The futures were up nice early but gave way as the morning wore on pre market. We opened a drop higher but it took only moments for the market to sell across the board. It started to look as if the bears were about to laugh their way to head fake from Friday, but, once again, it didn't last in terms of the selling.

As the day wore on the market found some buyers. Nothing huge but buyers nonetheless which allowed the averages to all close in the green. The Nasdaq led higher, which is important as it needs to lead if the market wants to rock higher over time. While today does nothing to alleviate the risk that exists in the market, it's likely the market will try a bit higher before trying lower once again in the near term. The hollow red from Friday did eventually follow through today so it would be normal to try higher tomorrow, at least early on but we shall see. A good day for the bulls even though things are grinding and whipping about. Nothing is safe, but the bulls will accept the gift handed to them all the same.

The question everyone was asking me today was why the bears gave it up on Friday after getting the perfect news for a bad day. A really bad day at that. The answer, as far as I can guess, is that the market is hoping the sequester will be a two-quarter event and, thus, it's not the beginning of a declining economy that has legs and momentum. It may. We don't know for sure but in a bull market the bulls always have the last say on things.

If they feel it's not the real deal in terms of weakening with real force, they are going to buy things up when they sell off. Only if the bulls thought this weakening was real for the long-term would they stop buying weakness. That, of course, would finally allow the bears to take over with confidence but for now, the bears are acting fearfully. They just won't attack. It seems they want to cover lost, short positions on any selling rather than getting aggressive. Until they do, the market will try and grind higher, although with difficulties.

There is more potential trouble brewing for the bulls on any move up. The oscillators are lagging again. No strong push with price action for now thus the likelihood is another negative divergence if we move up to old highs. Never a guarantee that the divergence will take effect immediately, thus, you'll once again, as usual, need to see a reversal stick. The fact that we'll see negative divergences seems to be a slam dunk. When that's clear to everyone sometimes it takes time to kick in but they will kick in over time, although potentially from decently higher prices as the divergence isn't official unless we can get back to the recent highs which for now is still a bit away. With negative divergences at new highs if we get there plus the sentiment issues and overbought headaches, it makes the market a dangerous place to be with any aggression to the long side.

Recognize that and if you desire to play, keep it light so you don't get shaken out very easily. That's the real danger. Too much exposure and, thus, bad exits. If you're in lightly, you can better handle the whipsaw we're seeing 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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