The futures were rocking lower after protests in Hong Kong annihilated their market. Europe was down and we were sinking by the click with the Dow futures down nearly two points at their lows pre market. The S&P 500 1966 key-support double-low level was in jeopardy, and, sure enough, once the market opened, the S&P 500 made its way two points lower at 1964. It looked over, but strong positive divergences on the short-term sixty-minute charts saved the day as the S&P 500 came back from the lows to finish at 1977.

After being down huge early, the bulls found their way back from the dead, so even though all the major indexes finished a bit in the red, they did close over critical support areas. In the end, that's all that matters. But don't turn away from the actual overall price action, which is turning more and more violent in terms of big swings. Historically that hasn't been the best of news for the bulls after a long bull run. The market is at the same price it was on the S&P 500 in early July. Nearly three months of swings with no price appreciation. That may be a warning sign that bulls are slowly losing their hold on things. It's getting interesting.

The market is shooting off large up and down days with lots of gaps along the way. If we see 1966 on the S&P 500 go away then the bears are making progress. However, if they can remove 1950, or the long-term up-trend line, then they are in business. When bull market have been in place for a long time it doesn't come easy for the bears to kill it off. The process to turning things more bearish takes a long time to unfold. Just when it seems the bears are about to take control the bulls save the day. These days we see the bears fight right back, which shows some form of a change of trend.

Getting the market to take out critical support doesn't come simply because there are so many areas of support in terms of trend lines, gaps, and moving averages created by the relentless bulls over time. They don't just vanish. They get fought at over and over and can cause a lot of emotional decisions by the bulls, even if the market is actually weakening. It may not feel like it's getting weaker because of all the initial saves, but it very well may be. There's enough bad action recently to fire up the red flag. The S&P 500 now has three gap downs in a very short period of time. All of them are open in terms of closing back above. It used to be only solid technicals for the bulls, but now the bears are starting to create more headaches for the bulls not seen in quite some time.

Lots of room in between to drive everyone a bit nuts. Go very slow and be careful.

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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