The bear market almost took another turn down today as the S&P 500 threatened to blow through the last gap up at 1869, but after coming within three points the bulls kicked it in to high gear and blasted the market higher. There have been quite a few tests of this last gap up on the S&P 500 that remains open, but the bulls have taken over the market once the bears get close. The move down off the top needs more unwinding upward on those MACD's, before trying lower over time allowing for an eventual test of 1812, but that will take quite a bit of time from here. The MACD's over the past two days showed no inclination to trend lower as price-dove down on those key, daily index charts. I don't know that the MACD's have to get back to zero, but they are still quite compressed lower, thus, more up time seems right, even if it's nothing on the dramatic side of the ledger. It is possible for the S&P 500 to still get to the 50-day, exponential moving average at 1970, while the Nasdaq lags, but clears the 20's, and falls short of the 50's.

Today's action away from the Nasdaq was simply fantastic for the bulls. The MACD's were pointing higher while the market fell, but once the market reversed, they did move higher, which is a positive sign for the market very short-term. The Nasdaq lagged badly today with a close well below the open, but some beaten up areas, such as the biotech stocks put in great bottoming reversals that are hard to trust, but they did reverse at new lows with some oscillators diverging positive. It's their chance to bounce and lead up a bit, but I wouldn't count on anything for certain. The charts are saying higher, but we shall see. A gap up that holds in the mornings first candle stick would be encouraging. The market isn't happy big picture, but should be opening up a small window of upside action. Let's see if the bulls can take today's candle sticks and run with them a bit.

The Nasdaq is lagging quite a bit these days, and that's due mostly to the old leaders starting to show their very first cracks. Some have fallen apart such as Priceline Inc. (PCLN), Amazon.com Inc. (AMZN), and LinkedIn Corporation (LNKD), while others are showing the very first signs of trouble. That would be from Facebook, Inc. (FB) and Google Inc. (GOOG). Still strong overall but showing some cracks. The thirst for higher P/E and higher beta stocks just isn't there for now. That's the world of the Nasdaq. The market is more interested in the safety trade or the world of the Dow and the S&P 500. With the bull-bear spread still minus, folks appear to be very fearful of a turn lower.

These folks also know that the market is taking down the Nasdaq stocks with ferocity. They're staying out of the way and running to those lower P/E, higher dividend stocks. The one area of lower P/E's not getting any love is the banks. This is a real concern. The reason is simple. The action in this sector is similar to how they acted in 2007, which was the prelude to a very nasty bear market. No one wants the banks, and with rates dropping, see the CBOE Interest Rate 10-Year T No (^TNX), the market is no longer enamored with this group. If the banks stay depressed, the market is likely to as well, except for the usual bounces. Banks need to find a reason to rally hard if the market is to have any chance of getting out of its current down trend. If the banks can't get going on any market rally the rally is doomed to fail before being able to clear any key levels of resistance. No matter what we trend very short-term, the Nasdaq should lag other than the occasional one day of out-performance from being too oversold.

A quick note on sentiment. The bull-bear spread came in at -4.1% today. Still in the red, which is a bit surprising to see. With Friday of last week being quite strong, I thought we'd see a number at the zero line or possibly a bit positive. Fewer and fewer folks are trusting moves higher. Fewer are getting bullish now on rally attempts, and that's a major change from what we saw one year ago. An amazing loss of market trust. No shock since the market hasn't been good for over a year now, even though the losses are still quite minimal. With the S&P 500 only down 11% off the all-time highs, it is amazing to see the bull-bear spread in minus territory since it was less than a year ago we saw readings of +40%.

Fear comes in very quickly. Always fun and interesting to watch human emotion in action. For now, the numbers are a bit market-favorable, but not a reason to go long in an overall, down-trending market with any force. A drop of longs or shorts is fine, but careful getting too aggressive, even with fear still ruling the roost.

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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