The market, as usual, refused to fall overnight no matter what else was going around the world. Our futures are refusing to follow others down. Ours is the market that just won't fall. The market opened flat and started moving higher as always until it ran into a real road block. The ISM Manufacturing Report came out and the number was just terrible. 51.2. 50.0 is the line between growth and recession for our economy. Think about this folks. Mr. Bernanke has implemented incredible liquidity. There have been basically 3 QE programs. Interest rates are near zero and staying there. The liquidity machine will remain on as well. All because nothing is working to get this economy flying higher. Not even a Disneyland bull market can get this economy rocking.

Fed Bernanke keeps trying, but nothing is happening on a positive level. They report employment is improving, but really, it's not as they don't report those who have given up looking. Our Government just doesn't believe in telling the truth for fear of what would happen in the stock market and how the public would perceive them. So the lies keep getting reported, and in the end, nothing is really getting better even though they're telling you they are. The bad ISM Report this time couldn't keep traders from taking froth down as the Nasdaq was hit much harder to the down side than the Dow or S&P 500. The Dow basically ended flat, but the S&P 500 was down a bit more and then it got worse as the froth areas came in. The small caps and technology stocks are taking the biggest hits. In the end nothing is bad at all as the bears didn't really seize on the bad news, but they were at least able to take some of the froth out of this market for a day.

So when do you take notice of something that is different than what we're used to seeing? When an index is basically flat yet the advance decline line is very poor. We saw nearly two to one negative on the Nasdaq and quite negative on the New York Stock Exchange. Apple Inc. (AAPL) continues to break down with many areas of the market now in bear markets. The commodity sector is one. Leaders such as Joy Global, Inc. (JOY), Agrium Inc. (AGU), CF Industries Holdings, Inc. (CF), Caterpillar Inc. (CAT), Deere & Company (DE), Cummins Inc. (CMI), and boat loads of other leaders just aren't performing well. Even Goldman Sachs Inc. (GS) broke down below the 50-day exponential moving average today. Amazon Inc. (AMZN) joining in. Fewer and fewer stocks are now participating in this move higher and that's a red flag if ever there was one. Forget the overbought conditions, which is enough to take a market down. Add in fewer and fewer stocks performing well and trading over their 50-day exponential moving averages and you have potential trouble in the near future. Hard to say as we know when things could get ugly but you have to recognize trouble when it looks you in the eye and we're seeing more and more red flags appear. So please adjust accordingly.

The one thing that is starting to stand out even more as we grind higher is the MACD's on those daily charts. They are looking worse by the day. The negative divergences in many cases are quite powerful and extending out. We still have mostly overbought weekly and monthly charts to go along with those negative divergences on the daily charts. We have fewer stocks participating. I don't know what to say folks, but the risk reward isn't exactly spectacular for the bulls right now. In a bull run it's truly impossible to know when things start to go south. However, one good hint would be a strong gap down that doesn't reverse as all the others have. That and then a second straight gap down that doesn't come back. When we see this set up take place the up-trend is over for several seeks to several months. It doesn't mean it's over for good because it won't be. As long as we have Disneyland Ben the market will continue to try for higher levels over time. The market would be best served with some deeper selling first and, thus, we can hope that it's around the corner but as of yet we haven't seen it.

Keep it light.

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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