The market uses excuses to get its dirty work done. It tells you when things need to happen by using news to move in a certain direction, even if that same news a month or so back would have done nothing to move it. When a market needs to get something done there is nothing you can do to stop it from happening. There was news today expressing some doubt as to whether the United States will be able to pay its debt. This same news has hit other countries with an initial sell off being bought heavily over time because their markets were bullish in nature. The news really isn't anything new to anyone. We all know this by now, but again, the market needed to move lower and it used this excuse to get the job done. Sentiment is just too bullish short-term, and thus, the selling from news that would have had no effect not too long ago. The excuse. The catalyst if you will.

The excuse was given, and so we sold, but when you look at today you can see it really was nothing from nothing in terms of hurting the overall big picture bull market, which we are still in 100%. Don't let anyone else tell you otherwise. When the market goes down hard for a day or so, even if it's just intraday, fear ramps up. That's what the market is trying to accomplish. Ramp fear since it's very easy to do. Fear is the king of all emotions, so it takes no work by the market to get some going. A handle, or down period, does the trick in most instances. So today we got a strong gap down. The lows were reached early in the day, and then the market spent the rest of the day recovering as all bull markets do. This doesn't mean we can't go much lower. We can. Today, however, showed you why you don't short a bull market. Too tough to get any sustained downside action, even when sentiment is a real problem. You work that headache off in spurts. Nothing from nothing, bigger picture, like I said.

The one thing I have noticed thus far is that earnings have not been as strong as most would expect. A larger number of misses than I would have expected this early into this reporting quarter. But it is early, and most of the better companies have not stated their numbers quite yet. When they do in the coming days and weeks, I suspect things will take a turn for the better. The overall market is suggesting that will be the case. If the market thought earnings were going to be bad overall this reporting period, the market would be selling much harder than it is currently. The market, somehow, seems to know all things. Google Inc. (GOOG), and some others, which have been having some problems for a while now in terms of growth, is struggling.

When they missed, it was no shock to the market, even though the stock sold off very hard. The market was able to shake off their bad news. The market would have a much tougher time shaking off bad reports from the likes of Apple Inc. (AAPL) or Baidu, Inc. (BIDU). Apple's earnings are out Wednesday evening, and needs to be watched very closely for more market insight. If it's good you know the market will rock higher. If it's bad, will the market sell off, if so, how hard? It may not be as much as one would think, but we'll find out soon enough. Bull markets find a way to rotate around even when it appears it will get killed.

Now that the market is down about 3.5% off the Nasdaq highs, you'll start to hear more and more bears come out of hibernation. They'll tell you how things were out of control to the upside for no reason, and how this market will now find a way to begin the next bear move. This is fear and pessimism doing their thing. This is a normal response to the recent selling, especially on a day like today, even though today was really just a gnat of selling. Any excuse they can find to tell us how the bull is dead will come out in a big way now, especially if the selling continues to increase for a while to allow the bulls to cool down.

I would suggest you follow your hearts and do what feels right to you. If you think we're starting a bear, then you should respond that way. I would suggest you give the bull market the benefit of the doubt and try not to get caught up in all the negative banter. There is absolutely nothing bearish taking place right now. It's a positive that we're selling a tad here, and that's all it's been. This isn't selling folks.

Support is clear as can be. We lost the 50-day exponential moving averages today, but not by very much. They can be taken back quite easily, although it would be best if that didn't take place just from the perspective of keeping bearishness raised up for a while longer. I would like to see the bull-bear spread get down into the percentages in the 20's, and out of the 30's, especially that nasty 41.6% printed two weeks back. The 50-day is now at 2740 on the Nasdaq and 1307 on the S&P 500. The problem is we also have gap downs today, which will make a strong recapture very difficult, even if we get back over by a little bit. 1313 is that gap top and will be very tough resistance for the bulls, while it'll also be tough to just blow back through 1307.

Six points of tough resistance says easy on new long plays here. The Nasdaq has strong support at 2700 down to trend line at 2690. That's gap at 2700 to go along with trend line so only ten points separates strong support. Very tough for the bears to remove. We will likely continue to ping-pong around for some time with good nights of earnings followed by bad nights of earnings. This whipsaw will continue to erode bullishness, which is a very good thing for the bull's bigger picture. Hang in there and be patient.

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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