It was a surprise to see the market gap up today, and an even bigger surprise to see it simply die after the open, since the gap up was pretty powerful in terms of price. Normally, after such a decent gap up, you run up all day and close at or near the highs for the day. In this tough environment which is on a sell signal related to froth, it's not easy to get a strong follow-through to the upside. It would be no shock if the market reversed down tomorrow. When looking at today's action, the bulls have to be happy they created an open upward gap, but unhappy about what took place once the gap up occurred.

It was a mixed day, even though the tape was higher. The problem the bulls were dealing with today is exactly the same problem for the bears. Dry buying versus the previous pullback, which saw dry selling. No volume on these gap ups to take things either higher on gap ups or lower on gap downs. It takes very little effort by either side to hold the charge after the gap open. So when summing it all up for today's action, I'd say the bulls came out slightly ahead, because they did create a gap up. They really shouldn't be celebrating, though, because the gap up simply died right at the open. Neutral behavior. Neither side showing what it takes to get the job down for now.

Lots of leaders didn't lead. The market really took its cue from the earnings from the likes of Citigroup Inc. (C), a major financial stock. This gave all the financial stocks a big boost once the market opened for trading. Many other leading sectors did not participate today. Not only that, all the financial stocks fell well off their highs, many printing black candles, meaning they closed below their open gap-up price, which is nothing to get excited about if you're a bull. Again, gap and run is what you want, but we got gap up and stall with a slow erosion in those stocks. So even the best of the best couldn't get rocking after the open, and that's why the market itself couldn't get blasting after the gap up.

When markets gap up strongly you want to see a big explosion in the leaders causing the gap. Once that doesn't occur in the first thirty to sixty minutes it usually means the party is over, which can happen when there's simply too much froth around. You don't know that for sure, but clearly, it can be seen as the excuse. Where are the buyers left to come in and take it up once it opens? Not many new bulls around with the spread at 45.5%. In powerful points of a bull market you get the gap up. Then those who missed the move come charging in, which brings the price higher, which then gets the bears to cover, and, thus, even higher still. The part of the equation is now missing. Today's lack of leadership could be a message that says easy does it. But we already know that's the way it is here with froth so extremely elevated.

Sadly, market conditions are such that playing heavily on either side of the coin makes little sense. When that happens folks get bored, and boredom frequently leads to bad trades. So please make a mental note to take it easy in terms of over playing intraday. It really doesn't work for the most part. The market is trading between the recent highs from which we have pulled back from, and the 20- and 50-day exponential moving averages below. There's not a lot going on, so until we break out above price, or below those 50's, it's a market of noise with nothing really going on, including today's upside sticks. Very little playing, and lots of cash, still makes the most sense, including not chasing strength. If you have to buy or sell, wait for strength or weakness first.

Do what feels right to you, of course, but that would be my best advice 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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