Just when it seemed the market would finally get a strong pullback to get rid of all this froth, it did an about face and rallies hard. Four nice gap downs to make the environment unhealthy, only to see two strong gap ups. Leaves them all guessing, and, of course, that is the intention of the big money. To always leave them guessing and getting emotional. The odds of this move would have seemed almost impossible considering the look of the monthly-index charts, which are basically deathly looking if you're bullish. That said, nothing comes easily for the bears in a bull market. We've discussed this quite frequently. Even if we're topping, the process is very slow, and can take many months.

The retail bulls don't give up easily after being rewarded for so many years by simply buying any weakness they could get their hands on. If a market is truly topping out, and even if we're only going in to a correction, and not a bear market, the process is still quite often akin to turning the Titanic. It doesn't come easy making transitions in the stock market no matter whether it's bull to bearish or bear to more bullish. This market is confusing and should be respected for that. When a market gets violent in both directions, it shows, quite obviously, that no one is in control, and that swings in both directions can be powerful and change from moment to moment without warning. Here we are at whipsaw once again. So today makes some sense even though technically it wasn't showing this hand. It keeps us guessing a while longer, and why not, nothing these days is easy.

So why the game here? Probably because the market is completely focused on Wednesday midafternoon to hear what Fed Yellen has to say on rates. Will she suddenly change her mind from raising rates? I think it's a real possibility, since she's probably unhappy about the market starting to slip. Don't forget, a lot of the inflation headache is likely being removed with the constant plunge in oil prices. Today was no different on that front. Oil plunging once again. That can't be denied as great news to Fed Yellen. Oil is grossly oversold, but it continues its downward move with increasing intensity. Oil is not showing any signs of getting out of what may be only the beginning of a strong and lasting bear market. It spent a few months plunging straight down, and then finally took a pause to unwind extremely oversold oscillators.

However, the move up was weak, while those oscillators unwound back up, and now it's starting its plunge all over again. If oil is beginning a new bear market for months, or even years, to come, overall, then she may not raise simply because many of the economic reports are not showing any real signs of improving. Clearly we're not seeing better GDP numbers, and the manufacturing numbers are terrible. Employment is better, but not from the level she wants most, and that's the higher paying jobs so there's a chance, may be not a great one, but a chance she'll squash the idea of raising rates now, and I think the market would love this. Wednesday is a huge day, unless we get the leak we sometimes get on the Tuesday, which would be tomorrow. Interesting times.

The market has spread itself out in the following way. There is one really great sector and one really terrible sector. The biotechnology stocks are in a massive bull market. The froth there is unreal, but still rocking along. The commodity world is in a powerful and relentless bear market. Everything else is riding the roller coaster back and forth. Biotechnology and commodities are the book ends. Both carry extreme risk. Commodities are incredibly oversold. Biotechnology is incredibly frothed out. The trades can still work very well as they continue their opposite marches, but they both can reverse short term at any time. The crème, or the middle of the stock world, is all over the place.

One day a stock is great, and the next day, for no good technical reason, things reverse. Very hard to play. You can try to catch the froth train in biotechnology stocks and you may do extremely well. No sign of that froth letting up but at least understand the risk. If you catch these stocks on the wrong day it will be very painful but hey, fire away. They keep rocking along but just know the risk involved. Bottom line is nothing is without risk, high risk at that. Do what feels right to you, but respect the game at all times here. 204.50 SPY is key long-term support. Market is fine above but the whipsaw is likely to continue.

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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