You cannot be surprised that the market took a big drop down Friday. The jobs creation report was well below expectations, which continues a series of economic reports that have come in weaker than expected these days. None of us want to see that, not just because it's bad for the market, but because it means that too many people are suffering without jobs. It tells us that the global economies are catching up to us. The United States was, basically, the wall of strength for the rest of the world, but the economy is weakening due to the problems abroad, problems that don't seem to have a good solution right now. The slowing in our own economy is rapidly accelerating. Just four to six months ago, there was improvement across the board. There was one economic report after another coming in with data stronger than the previous months. Now the same thing is happening in reverse.

Each month, the reports are weaker and weaker. There's the occasional good report thrown in, such as our most recent ISM Manufacturing Report, but the overall trend is clearly going in the wrong direction. The real question now becomes, what does this all mean to our stock market. Fortunately, it's not as bad as you'd think. Unfortunately, however, we have a secret weapon out there meaning Fed Governor, Mr. Bernanke. He's hinted quite a few times recently that he's ready to do whatever it takes to keep our economy humming along in a positive fashion. Of course, that means the implementation of QE3.

That's not a good idea for the long-term health of our economy, but it is a short-term solution. It ultimately adds more debt, making the future cloudier than it is already. He's only concerned about the stock market, and he knows the market would love more free cash for what ails it. He focuses on the stock market, because the stock market is basically the economy. Wealth created in the stock market translates to spending in the economy, and thus, keeps us out of a recession. Europe is already in a recession, and he will do whatever he can to prevent us from joining them in the pain. He'll try to implement anything he can, if thinks the stock market will like the news. That reality will never change.

So, what are the ramifications about implementing another QE program? Many of us wonder why he keeps trying to prop up the stock market, instead of letting things simply play out over time. The answer is rather simple. Alan Greenspan.

Alan Greenspan opened the candy store. Inappropriate global behavior made things what they are today in terms of the debt headaches that simply won't go away. Mr. Greenspan knows that if he does not support the economy, with massive amounts of free cash, we'll go into a deep recession. He also knows this means a huge spike in unemployment, and everything that sadly goes along with such a reality -- increases in crime, broken homes, and worse. Political pressure will be immense from all sides. The tension, and fighting, will be out of control. The world will be a mess to put it kindly. And I'm not sure this means he should actually do anything. I don't think he should to be honest. Sometimes there is no way out.

Sometimes you have to take the pain. But Mr. Greenspan doesn't seem to want to let that happen on his watch. He has his reasons. Maybe he really believes he can still help what he hasn't been able to thus far. Maybe it's simply political pressure to act. Probably lots of very emotional things taking place. Bottom line is he won't let the ship go down as he has more than hinted at over the past many weeks and months. He will probably do whatever it takes to keep things afloat, and I, for one, do not expect this market to go back into bear mode. It's just a continuation of a large base set-up that's probably not complete in its high/low structure. That may require many months still. If the fed ever did surprise us all by saying his liquidity days are over, only then, would we see the market really take a wicked plunge lower. For now, the expectations are still with the Fed riding into rescue us all. Or so he thinks.

The market had a very nasty day today with some poor technicals leading the way. There were gaps down below key 50-day exponential moving averages to go along with other technical pattern breakdowns. It's not good to see that, but under no circumstances has this market transitioned into a bear market. That's a long way from happening technically. There's solid support at 1357, but it would not be a surprise to see it go away. 1340 down to 1325, or so, is where I could see things bottoming out. The lower, the better, as it sets up a larger base in which to play. There is no arguing, a large gap down and run as to the technical damage caused. It's not pretty at all. Any rally back up to the gap down will be met with very willing sellers.

The bulls are behind the eight ball with today's action. No real way to paint a different picture. The damage created today was real. The gap remaining wide open really hurts the short- to medium-term for the bulls as it would now take unexpected great news on the economic front to get that gap taken out. There isn't a big report of that nature coming up any time soon, plus with the overall reports heading south, it isn't likely we'll get any news to make this market a fun place for the bulls to be now. Not great for the bears, either, but today's move lower puts them in control a bit more than the bulls, for sure. 1357 is key short-term, as said, and if that goes, we'll see 1340/1325 quickly. 1422 remains resistance you won't be seeing any time soon. Buckle up as things are not going to be fun for some time to come for both sides, but do recognize that the bears made progress today in keeping the bulls depressed for a while.

Have a great weekend.

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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