The market tried higher in the morning only to see the rally sell off quite fast. The usual market swings took place for the rest of the day until there was about forty-five minutes left in the session. From there the daily index charts all put in bottoming candles. Well, at least it seems as if they did, but who knows in this insane environment of massive whipsaw. What should be often is not but again, these should be very short-term bottoming sticks that if correct, isn't a message of hold on long term. It's an in and out market for now. The Dow was the very first index to challenge down to its 200-day, exponential moving average. That's because the multi-nationals have been hurt in the Dow-30 based on currencies.

Once the Dow hit the 200's the bounce was on in a stair-step fashion, until the end of the trading day and up we went. It's normal behavior for a market not in a bear to hold those 200's on the first test. It can often take three to four chances before it goes away. It may never go away, but that's normal protocol. With the powerful close we can push higher and not really worry about those 20- and 50-day exponential moving averages just above since the bulls and bears are pushing them through both way with relative ease these past few months. Normally it would worry me to put out a single play long with those moving averages so close, but a study of the market indexes show they have become relatively unimportant these past few months, thus, they must continue to be looked upon that way until proven otherwise.

The VIX has tried numerous times to break out from a wedge that if it succeeded, would send the market flying down. It got to the top of the wedge today and was readying itself to blast off but once again a massive tail occurred and up went the market. This type of behavior normally leads to it resting a bit, which would allow for some type of stock market rally but in this environment you can't count on anything. I'm just stating what normally would occur with type of failure over and over. The VIX has tried many times to make the move. Today felt somewhat exhausting, thus, I do think it wants a little lower first which again, should allow for some rally in equities but don't count the market flying up day after day, if we even get a full day. The volatility should likely continue as the bears and bulls battle it out. Nothing is safe for either side. And don't allow today's recovery to make you think otherwise. Let your guard down and you'll get smoked.

There are basically no bears around folks. The buy mentality is still out there as the Fed has left little else to be invested in. I get many questions about why the market simply won't fall apart. Frustrated traders. I can tell by the tone of their questions. You can feel the anger in their voices as fundamentally things are terrible. Yes, the durable goods report was poor. Yes, the GDP report was terrible and yes, the ISM Manufacturing Report was terrible. Bad, bad, and more bad fundamentally. The Fed and the ECB in concert continue to work together to keep the markets running higher as much as humanly possible. At least bearish folks can feel better about the efforts being made by their side but for now the fed Governor's around the globe are still able to hold things together enough to prevent a bear market. Again, for now anyway.

What you should do is play lightly and recognize the risk for both sides that just isn't going away any time soon.

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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