Saved!!!.......

What other word best exemplifies what took place today. The Sp was toast. It was done. The market was ready for a test of 775 Sp. Then came the last hour. And what an hour for the bulls. Saved!!! The bulls stormed back made sure the bears would not be licking their chops tonight. This is why you have to keep it very light folks. With the vix in the 70's, what other way is there to play. 200 points on the Dow is 5 minutes worth of action. The old closing low on the SP is 848.92. The trend line right on 850. The market looked destined to take those out but they didn't. But was the save a healthy one? Not really. There are a few reasons for this and we need to discuss them now. When a market reverses back up from the brink of technical death, you want to be sure all the indexes perform well at the same time. No one major index should fail. We did fail, however, on that level. The Dow was up 150 but the Nas was flat. The Sp also under performing the Dow. The sector with only 30 stocks, the Dow, did best. The sectors with loads of stocks in them struggled. This also points out number two in our discussion. The advance decline line. It was horrific. Basically two to one negative on both the Nas and Nyse. That kind of internal says do not get overly optimistic. You would expect two to one but for that to be a positive reading, not negative. Bottom line for today is we did hold major support, poor advance decline or not. It opens the door to some further upside action but in this bear you never know. It's not worth trading it up as long as the internals remain weak on up days. The one constant over the past two months has been the Vix. The volatility in this market is insane. It creates tremendous whipsaw and emotional reactions. The more you play the more likely you are to experience some bad outcomes due to that emotional response to any play you may own short or long. It's best to remain heavily in cash. there are moments to play stocks of course either way but with the Vix near 70, you have to know the risks that come along with playing a high number of stocks. You then ask yourself if the emotional roller coaster is worth it. It probably isn't. I don't of many saying this volatility is making trading easier. I really don't know anyone telling me that to be honest. Some very experienced minute traders maybe but not many out there are enjoying this type of back and forth. Cash rules overall. For the bears to feel as if they total control they know they need to get the individual to make new closing lows. They have succeeded on the Nas and on the Bkx or financial's. Even the Russell 2000 made a new closing low but by only one point. However, a new low. The problem for the bears is that they are not getting confirmation from the Dow and more importantly, the Sp. The old closing low of 848.92 was there for the taking but it was not to be. The Dow was also below its old closing low at 8175.77 but that too was saved by the bulls. True confirmation comes when all of these indexes are breaking the old lows at the same time. This is not to say that the bears aren't in control. Clearly they are overall but you need to take out the old legs if you're going to start a new leg down. In this bear anything does go and we could just crater out tomorrow due to that poor advance decline line but for today, you have to give the bulls their props so you can't get too bearish and just go heavily short right now. That would be inappropriate. All you can do when we are in a confirmed down trend is use strength to short. When we look underneath the surface we see stocks like C were nicely lower once again. No bounce there or in other important stocks even though the market bounced hard late. The market was oversold on the short term time frame charts and that had some to do with today's late bounce. Leaders did not lead on the way up however. Some did of course but it was from across the board. There always seems to be something missing whenever we rally off the lows. Banks look terrible still and the bulls need to focus their attention to these stocks because until the financial's can get moving appreciably higher, the market will struggle mightily. No shock that leaders lagged overall today when you look once again at the advance decline line for the day. Look folks, this market doesn't get any harder. The hardest I've ever been involved with. To make things tougher, we have to deal with extreme moves up and down every ten minutes or so it seems due to the high Vix. Day after day. The only thing one can do in this environment is to think capital preservation. You have no choice really. Less is more. I know that's boring but it's far more boring to lose your shirt day after day. I hate this market myself. It's no fun not being able to play so much more based on the risk created by the fundamentals, not to mention the Vix. Technical's are not working well, especially on bullish patterns which I guess makes sense as bullish patterns don't work well in bear markets. However, even bearish patterns can not work at times. This bear is different and very frustrating to all except for the fact that overall we have missed all the carnage. We have gotten hurt from time to time but not before making out even better on previous plays. It is what it is. A positive year in this market is something to feel good about but I know it hasn't always been perfect. All I can do is try to keep guiding. Do the best I can and ask for your patience. You can't force what isn't there unless you want to be inappropriate. That's not for me. That's not fair to you. The market saved itself today. The internals stink thus no longs. SIGH!! It is what it is. 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. Sign up for a Free 30-Day Trial to SwingTradeOnline.com! (https://www.swingtradeonline.com/reg/AT)

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