When a market corrects hard there is only one normal way retrace the move back up to unwind oversold conditions and test lost 20- and 50-day exponential moving averages. You take weeks to do it, and you do it slowly and gradually without any large gap ups. The S&P 500 now has three gap ups with two of them over a ten handle. Very unusual for a back test and makes you wonder just what's going on. It's basically almost a v bottom for now. On top of that we have MACD crosses on the daily-index charts from very low positions, which, of course, is far from a bearish set-up. With all of this I remain open. I thought for sure there would be another large, hard move lower in the market and that may very well still be the case.

The market is NOT safe by any means but the action just isn't bearish, at least for now. We could still go quite a ways down but you ask yourself why are the oscillators even better than price. They just shouldn't be. Oscillators should lag price allowing us to understand how weak the move is off the lows. We're seeing the opposite. I don't have to understand it, and, again, I don't so I remain open to both sides of the coin when recently I thought there was only one side to focus on. Never bury yourself in a belief. You may think something is going to take place, but you need to adapt or adjust to whatever is taking place. For now, while I think another move down makes sense, and a hard one at that, there is still the possibility that the market has finished its dirty deed of selling hard. A day at a time.

Mark it down on your computer. 1975 on the S&P 500 or the long-term uptrend line. That's the level the bulls now must focus on if they're to ever see the old highs at 2019. The bears should try, one would think, to throw everything under their powers at that level should we visit it some time next week. It is extremely unusual to lose such a critically important level of support only to come right back and get through on at least the first test, if not the second or third. One would expect a large move lower once that's tested but again, oh those darn oscillators. I'm using nice language.

They are strong, thus, it's not impossible to get through, but our only focus, and I mean only focus, is S&P 500 1975 on a closing basis and if you get through you don't want to clear by a couple of points. Some volume along with a strong move above on a closing basis is what the bulls need. These are very interesting times. It doesn't make sense to get through 1975 and the majority of folks are thinking the same way, trust me. Maybe that's good for the bulls, but some very smart money, one would think, is readying to short that level. We will find out soon enough. Again, very interesting times. Do or die is upon both sides.

Froth has calmed down. The bull-bear spread at 17%. Bears still too low at 18%. The AAII is still very bullish. So yes, froth has calmed down, but it's far from perfect and again, one would think more lessons have to be taught before the selling stops. 17% really is great, but, normally when you are at 17%, you have 25% bears and, thus, I'm still not excited. 17% is better than 46% to be sure. So pick your spots such as we have from time to time but don't get overly excited, especially since we also have the critically important fed statement on Wednesday. A very intense, massively important week is upon us. Buckle up. It should be an explosive, volatile week.

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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