Markets find a way when the time is right. And they also find a way when the time is right. Confused? I'll explain. When they want to correct they do so. No amount of good news will take the market higher. Good economic reports will simply be ignored. On the other hand, when the market wants to correct, but not get slaughtered, they'll find a way to hang in there even when the very worst of news hits the street. We got that type of news today in a very big way. The ISM Manufacturing Report came out at 49.00. Gulp! Contraction!

The economy is in recession. Will it be longer term? Will it be just a month or so? No way to know but what we do know for sure is that it is in recession at this moment in time. The market got hit on the news but by day's end you can see there really wasn't very much if any selling at all. Big money protecting both sides. Market needs to correct, but the market needs to hold as well as the Fed is still the protection everyone craves. It's not going away. So even the very worst of news couldn't kill the market. Even good news last week couldn't keep it moving higher. The market has an agenda. Nothing is going to get in its way of completing its chore. It wants to unwind. It wants to hold up as well. Agnostic as she goes Captain.

Lots of huge slaughters today. The froth stocks took a beating. One by one they took it on the chin. Biogen Idec Inc. (BIIB), SolarCity Corporation (SCTY), Tesla Motors, Inc. (TSLA), and many, many more. The list too long. That's how markets unwind themselves. They find the most overbought situations. They find the most frothy stocks and they punish them hard creating technical breakdowns through key moving averages or gaps. The moves down mostly preceded by negative divergences. They kick in and the selling is on in a very big way.

The technical breakdowns are such that getting back to their old highs for the short- to mid-term is nearly impossible. That's how the market stays agnostic and frustrates the masses. Hey, this stock was rocking and now it can't bid. Market must be done. I give up. Bear market here we come. Sentiment unwinds and the cycle continues. Wash, rinse and repeat. The market will need time based on some of these nasty moves today but there's still nothing at all bearish taking place. These breakdowns are healthy for the longer term.

The market may need a lot more time of whipsawing about and it's reasonable to think we'll see 1575, or so, on the S&P 500. It doesn't have to and we have great support at the 50-day exponential moving average at 1606 on the S&P 500. The 1600/1606 area is very powerful support so that may be all we get but if we fell to 1575 that would not mean things are falling apart. Time is the one thing traders don't like when it comes to corrections.

The problem is over playing so please be aware of that for the short-term or you'll feel the wrath of the whipsaw. Learn to sit on your hands and let things play themselves out. There will be bounces, but be careful not to run in every time we get a small bounce. It feels to me as if the market still needs more time, but there's nothing bearish taking place through this process of unwinding both the oscillators on the daily and weekly charts and unwinding sentiment. While nothing is classic in terms of overbought, the oscillators and sentiment could use a little more time.

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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