All of the key indexes in the stock market are heading lower now. A bad week for sure, with the S&P 500 now joining the Dow in the red for the year by nearly half a percent. The Dow down nearly 4%. The Nasdaq is now barely green for the year. Lots of whipsaw thus far in 2014, but it appears the bears are now slowly but gradually taking hold of things. They are still mostly gutless, and are still missing the one necessary ingredient that would turn things clearly their way, and that's to establish a massive gap down that runs lower all day closing at or near the lows.

With all the selling we've seen the past two days, there are still no open gaps for them to put a real hurt on the technicals and on the psyche of the bulls. The bulls are hurting a bit, but it would take only one gap up to put the bears back on their heels. The bears are desperate for a strong gap down and follow through day. They need that gap down here in order to put 1850, which is now resistance, in the rear view mirror. So yes, the bears can feel a little better about this, but the truth is they still haven't done the one thing that's left for them to do. Maybe next week, but again, they need to do it before the S&P 500 clears forcefully back above 1850.

When looking at the global stock markets the charts are terrible. If the global markets continue lower it's hard to imagine we'll be able to go higher with consistency. On top of the global charts looking poor, you have to look no further than our key-index charts on the weekly and weekly time frames. They are terrible. Negative divergences everywhere. Overbought everywhere. Poor oscillators across the board. Technicals don't lie too often. They surely fail from time to time. Nothing is perfect in this game, but the technicals suggest things are going to be tougher now for the bulls. Possibly much tougher than most think possible. If they play out as they suggest, the correction could pick up speed in the weeks ahead. No way to know how hard things will fall, and that's not our concern.

We figure things like that out as we move along. The thing to focus on is how these charts look, and they suggest lower prices ahead. Not every day, but lower overall. If the charts were just bad here and there it would cause more confusion about where we are going, and of course, there are no guarantees in a bull market, but the number of poor technicals just about everywhere says that at the least you need to be extremely careful for the short term. Number one being to avoid froth at all costs. Number two is to respect what we see. It may not play out, but the charts don't look very favorable for the bulls.

1831 is the 50-day exponential moving average on the S&P 500. If we lose that level with some force in the weeks ahead then the trend will have officially changed to bearish. You could then start shorting on a back test that's weak on volume, without gap ups, and ultimately fails. Until that time comes, and of course, do what feels right to you, but it's best to be heavily, if not totally in cash. Just too much risk both ways until you get that break down below the 50's. Patience a true virtue. Few have it. The emotion of the game too powerful. I think working on being heavily in cash is the most appropriate thing for you to do.

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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