The market is getting more and more boring as volatility gets lower and lower. This is due to complacency setting, which is causing the VIX to drop while volatility falls off the earth. This can play on the emotions of traders as things barely move, and they get bored, which causes over playing and more poor choices for their trading portfolio. The market grinds higher as a bull market gets more mature due to the bears leaving the game for the most part. All that is left are the bulls. But let's face it, most are in the game. Don't let anyone tell you otherwise. With the bulls in and the bears gone, there's not much to move the averages one way or the other, so the market trades in very thin ranges for most of the day and most of the time as well.

This is when you need to be especially careful, so don't get to the point where you think things aren't going as you would like them. If you know what to expect then you can adjust your trading, and lose the emotional part that causes you problems. If the market continues to grind higher, we may see what's currently in the 11's move well below 10, and if you think the trading range is thin now, you won't like a sub 10 VIX, my friends. You will be beyond bored, and, thus, things will get even more dangerous emotionally, so be careful. Again, adjust to what's in front of you each and every day. The complacency is causing the low VIX. The price you pay as bull markets grind along inappropriately.

We now have six straight quarters of declining earnings, and, yet, the market keeps playing with new highs almost daily. The disconnect is getting more and more out of control. There are no signs that this problem with earnings is going to improve any time soon. If you add in the awful negative divergences we're now seeing on the daily index charts, plus the continued global slow down for the most part, you can't help but wonder how long low rates by themselves can keep carrying the market upward.

It makes me more and more nervous every day to be long anything, to be honest. This will all end so very badly someday, but that someday is an unknown day. No way to predict how long the market can remain controlled by the fed without falling apart. Someday the market won't care what the fed is doing and simply fall to pieces. But, again, there is no formula for understanding that moment in time when the nonsense ends. My fear is when it does it will, as usual, catch the masses off guard. No one will see it coming. No signs of it, yet, at all, but as day turns to night, it's out there and will arrive unexpectedly.

Through the years, when the market wasn't controlled by the fed, when the negative divergences we're seeing on the daily and monthly charts existed, it wasn't long before the market took an absolute beating. The Dow, at an equal high has a MACD that's 100 points lower than the last high. The negative divergence thus is of the severe variety. Normally, without fed control, the market would fall apart with such nasty negative divergences. It hasn't happened. Not yet anyway. Amazing to see how this holds up. The divergences are on so many key time frames it makes you sit in disbelief when you wake up and see the futures hanging strong.

All I can say is be careful out there, folks. The market may continue to ignore its plethora of problems, but know they're out there, and, thus, respect them. 2134 is all the bulls and bears care about. Above, it's still rock and roll time for the bulls.

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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