When playing this very silly game you look for changes from the trend that was in place. We have spent a long time watching just about every attempt at selling being bought up quite rapidly. The bears banging their heads in frustration as the market refused to sell. It spent a long time basing but then made a final leg higher that has now seemingly come to an end. Four gap downs still open and counting. No gap ups to counter. The technical damage quite serious for the bulls to have to overcome.

Even with the short-term sixty-minutes very oversold the market couldn't get out of its own way today. A powerful change of trend. At the smallest hint of oversold we were used to seeing the market explode higher. We are still oversold for the most part thus it would be no shock if we do rally some, but the market is now finding it much easier to stay oversold. The bulls are loaded up and full. Not many new ones left. Also, they are now beginning to feel a bit of fear and that too will help keep the rally attempts squashed for the most part. So yes, we're overdue for some buying, but nothing is coming as it used to for the bulls. The happier days are over a bit for now. They'll come back, just not as soon as most bulls would like.

The bull-bear spread has gone from 46.4% two weeks to 39.5%. This week will only help to move it lower, probably with some force behind it as well. The market needs some deeper selling to get that bull-bear spread back below 30%, such as what happened in October. It lasted for only two weeks, but it did the trick. If we have three weeks including this one of really bad action we should be below 30% by the April 2 meeting.

It would actually be really good if the market just got smoked and over time we could see readings on the bull-bear below 10%, but that would require help from the fed meaning lots of rate hikes or the threat of them and no new QE program. Not likely but hey, you never know. If things get bad enough meaning if the bulls just fold up the tent and leave she'll probably no something fairly drastic, but that's not from here. The froth is coming home to pay back the bulls. Where it stops is unclear for now.

The Fed has its meeting next week. I am going out on a sill limb here and making a weird prediction. If, by Tuesday, when they first meet, the market is still falling, I believe she'll come out with a statement saying she will raise rates imminently. That she needs more time and data before embarking on any rate hikes. The jobs created are not top end ones, not high paying, and the evidence from the world of manufacturing is not good enough for the economy to start raising rates. I think she'll find an excuse to try and make the bulls happy again and to get the bears retreating.

I realize this is not the popular prevailing view, and I must admit it's not following what we've been hearing overall, but my gut says she'll try to pull the rabbit out of the hat to save the market from falling further if things are looking bad by early next week. Remember this, she wants the stock market to hold so that those precious 401K's still look good. If they don't, people stop buying and the economy tanks. She'll do everything under the sun over time to prevent lousy feelings when those reports are mailed every quarter. We shall see what she does. Don't count on my theory working but it's just a hunch.

KEEP THINGS VERY LIGHT.

The market is in trouble here short-term. It's very overdue for a strong counter rally bounce off of oversold but the message is getting clearer by the day. If we lose 2020 things could get really nasty. 2020 gap support needs to hold but we're getting close to a real close below up trend line support with force. Not good action. Monthly charts remain weak at best. Horrible at worst. Not much good out there for the bulls. Always rallies but I think lots of cash is clearly the best course of action short term.

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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