The S&P 500 uptrend line from 2009 is hanging on by a thread. During the day it went far below only to take it back late but barely. 1925 the level, and with a close at 1923 that's a hold. You need a strong, powerful close below to get the market to fail fully. We are close, but no cigar yet. In time I do believe the market will lose this key level with force, but we may be too oversold short-term, although that is by no means a guarantee. Bear market stays oversold, but the levels of oversold here are unusual. Near zero stochastic's on many index charts. Some as low as 0.59 today.

That was reached on the small caps chart. RSI's are all sub-30 on many key time frames along with all oscillators deeply compressed. It's now or never for the bulls as they fight a level they desperately don't want to see disappear. If 1925 does go away with force, there is no way short-term to measure how far down it goes since we haven't traded below the long-term uptrend line in nearly seven years.

The market would start creating its own, new support zones. They would probably coincide with deeply oversold conditions. The bears were enjoying last night's futures, but they recovered by the open allowing for a move higher that failed badly as the day went along before we rallied decently end of day to keep the bulls alive for another day. These are very interesting times for sure as the market may soon send the official we are in a bear shot that no bull wants to deal with. We are due for a rally short-term, but we have no idea if that'll come to fruition. The bulls better hope something good comes out of China this evening. It would help their cause short-term.

The Titanic is turning slowly, but more gradually now folks. It took a year plus of spinning ever so slowly, but now it's making its move. Those long-term monthly charts playing out for sure. I have never witnessed charts that appeared more bearish, thus, we can't be shocked if we do enter a bear market with some gusto fairly soon. Once the ship makes the turn you need to get out its way. Don't ignore what you see. Don't deny what's obvious because you'd like a different outcome. This is where both sides get hurt. They don't want to deal with the market going against their belief system, and, thus, they pay a terrible price for their denial. The best advice is to keep it very light and to keep stops tight. This market is getting extremely volatile. The bulls fight, but the bears take it back rather quickly. Sector after sector is breaking down and that's never a good thing for anyone who wants only upside action.

Lots of big rallies will definitely occur over time and can hit on any given day but you need to keep things in perspective and recognize the bigger picture trend taking over. We'll see where we are at the end of the week, and if that weekly candle is on breakdown, then you'll need to make some adjustments to your market thinking over the next several months to come at least. One day at a time here. Nothing is easy.

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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