That's what you have to say for now, simply because there is still hope for them based on sentiment, which I'll talk about later. The bears created a solid reversal down yesterday. The key would be whether they could follow up the reversal lower with a large gap down today that runs lower in to the close. They accomplished step one with a strong, nearly ten handle S&P 500 gap down. They almost succeeded with step two as once we gapped lower we ran hard to the down side. Step three, however, the most important step, they could not pull off. They needed a large gap that closed at or near the lows. That just did not take place.

The bulls took the bears hopes, and dashed them for now, as once the key-index charts tested their 20-day exponential moving averages they took over. There's nothing rousing where you think the market will just blast up from here, but the bulls were able to rather easily take the market up once those 20's were tested. The bears may still get the job done, but from a classic technical perspective, the bulls were able to put some hesitation to a larger down side move. The next few days will be more than interesting as we will get to see if the bulls can now try to take this back up some.

Will they be able to? That's the key. It's quite possible we're simply in a sideways pattern that will chop your heads off if you get too aggressive. Hard to say for sure, but lately both sides have been unable to get things moving their way with any force. Now the bulls have their chance in the next day or two.

We had a nice surprise today on sentiment. The number is still poor overall for the bulls, but nowhere near as bad as I thought it would be. Based on last week's market action, and with the bull-bear spread already at 39.5%, I felt the number this week would be easily over 40%. I was happily wrong as I said. The number at 37.7% is poor, but nothing to get overly worked up over. The bulls are still decently below 60% with a reading at 55%. The bears moved up from a dangerous 15% to a bit over 17%.

Not great, but at least it went up some. You don't ever want to see readings over 40% on the spread, and you never want to see the bulls at 60% or higher. So the bulls continue to keep things stretched, but not to the point where the market can't rally some. It would be hard to explode higher, but it sure can move higher if it wants it badly enough. If the market continues this way the rest of the week it's possible we see the spread shrink a bit further next week and that would not be a bad things.

It blows me away to see how bearish people get so quickly once you get any type of selling. That's why the spread can drop quickly. Keep in mind, as I have told you over and over, that unless the bears can remove 1850 on a closing basis, the market is in noise land. That nothing relevant is happening. If we can close above 1883 then the bulls can think they have another leg up coming. If we close below 1850 the bears will think, and rightly so, that a leg down is under way. In between is chop.

Chop is tough on the soul, but recognize it for what it is and it can keep you calmer so that you can trade more appropriately. Day to day here. Now let's see if the bulls can move things up a bit off of today's morning lows.

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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