Is everyone's nightmare about to realize yet again? Unfortunately, that may be the case. We may have seen the elevator move down one flight after nearly a year of being stuck on the same floor. The repair man finally got to work, but it seems he left the building a bit too soon. He thought he fixed the problem, but after a quick fix it didn't hold. We're possibly on, yet, another broken elevator to nowhere. The old boring-to-nowhere range was understood to be at 2134 down to 2040. Now the new range may be S&P 50 1900, or thereabouts, to 2040.

How would many months of that feel on your soul? Probably not too wonderful. I know it wouldn't feel great to me. Simply make the market mostly unplayable, because you spend very little time at either side of the full range. Most of the time is spent somewhere in between making the market extremely difficult to play appropriately. A directionless market is never any fun for anyone, but it will surely prevent the market from getting too frothy again, so that shouldn't be a worry. We'll take what we can get in this potentially difficult environment. Now there's no guarantee we're starting a new range, but since getting back through the old high at 2040 should be very tough, it's quite possible a new range is being established.

The two massive gaps off the bottom will act as amazing support for the bulls, thus, it will not be easy to get the market to break below the old lows from here. It's always possible we get a V-bottom up and out, but with 2040 along, and many exponential moving averages above current price, getting through that much resistance will be a very tough task for the bulls. Always easier to get a bullish resolution since markets almost always go higher, but even the bulls should struggle at least somewhat with this. So the question arises about where we are. It seems to me it's quite possible we've entered a new twilight zone to nowhere. Let's hope not, but we have to take that possibility quite seriously here. If the bulls can V it out then that would be great news, so we can hope for a strong close back above 2040, but my gut says that will be tougher than we'd all like.

You know how I always say complacency requires no action. You relax and let things take care of themselves. You keep things status quo. Market flat to up, thus, no need to do anything. You coast along. You know I also always say fear requires getting emotional, which requires action. When you take action things unwind very quickly. We have seen the bull-bear spread move from 46%, which is unsustainable long-term down to 9%. Yes, that's 9%. The last few months, and, of course, the action over the past few weeks, have knocked it down in a very big way. It is now safe to say the problem of froth in terms of the bull-bear spread is gone. Hopefully, gone for a very long time, but that depends on whether we V out or not. A long-term range will knock it down even further, or at least prevent it from getting out of hand to the upside once again. If we get the V bottom many are looking for and is still possible, we could see the froth come right back in and get us back over 30% once again. That would be unfortunate, but we shall see how things unfold. If you're a bull you have to love watching the fear accelerate. For now, we can at least say the problem with froth is in the rear view mirror.

A few things to keep in mind. The monthly charts have unwound some, but still stink in a big way. Oscillators are poor as well. Declining moving averages on the daily-index charts and regular-stock charts are never a great thing for the bulls. That said, never forget that markets like to go higher in a very low rate market environment. There are some things that say go long like the natural vibration of any normal stock market. They like up but there are still red flags abounding, so it probably won't be easy any time soon, although I too am now on V-watch, but totally unconvinced. I do favor the lateral scenario, but I am on watch. If the lateral scenario plays out as I expect you're not going to like the stock market yet again. You'll need to play lightly and expect tremendous whipsaw yet again. No fun, but you shouldn't fight what you see. A lot to be learned in the coming weeks about which tune we'll get to hear. The tune of joy, meaning the V scenario or the tune of melancholy or lateral. We shall see take nothing for granted. Things may be tough for quite some time to come. Don't play on hope.

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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