So it wasn't the biggest break of all time, but for the first time in seven years we saw the S&P 500 close below the long-term, uptrend, weekly line. That level being approximately 1925. The loss on the S&P 500 keeps it in line with its fellow indexes in the small- and mid-cap stocks. They have led down and broke a week, or so, ago, but it's more important to see the biggest leader of them all, the S&P 500, break down. This should have turned the tide in the favor of the bears in a big way, but the key for them is to seize on the opportunity at hand, and take the bulls down even further to put some distance away from that rising trend line.

Today saw hope early on, especially if you take the futures from last night, which were down nearly a ten handle. We gapped up after recovering those bad futures and seemed destined for a strong day. It would make sense to at least get back to the gap at 1985. We hit 1950, and then it was downhill from there. Nowhere near a gap fill, which is really hard to believe since it was the fifth gap down in the move off the top. Recovering one gap should be a piece of cake, but not to be on this day.

We spent most of the day from that point on reversing hard, getting as low as 1886 on the S&P 500 before moving higher later in the day. This is important to understand. It's the first time in just about seven years that the bulls didn't have the strength to make it back over the weekly, uptrend line. While it's not the biggest break we've ever seen it is interesting that it took seven years to change the trend. Now the bulls have to get busy quickly, and they certainly have oversold on their side. Oversold can stay that way as we know. So we are in some very interesting, and quite important, times here for that bull everyone thinks we're still in, if you watch the business channels. Have we transitioned? You can't be sure yet, but there are clearly signs, and they shouldn't be ignored because you may not want it to be that way. A change after seven years isn't something to ignore. Tomorrow, and the rest of the week, will be extremely important. The longer the bears can keep us below the rising uptrend line, the braver they'll get, and the more dire the situation will be for the bulls. A day at a time.

There is something interesting to look out with regards to sentiment. The level is now at minus 7.1%. The first minus reading in quite some time. It's not too long ago we were looking at readings in the forties. If we look back, and thanks to DB's research, we have seen readings as low as minus 54 in 1968. In the 2007-2009 bear market, we saw minus 32%. These levels tell us there's plenty more to go if the market gets bad enough before it would have to bottom. Being at minus seven percent does not say we have to bottom out and blast back up. Not at all. We've seen minus 41 in bear markets. Minus 34, and so on. So at minus 7 we can see far lower prices in the market. Don't fool yourself in to thinking that the market has to reverse. We can get oversold, bounce, and surely we are due for one, but things can get far worse before we see an end to all of the heavy selling. Sentiment is heading in the right direction, but that doesn't tell us much. With an eroding global economy, and nasty monthly charts, it's likely they'll play out first over time.

The old low at 1867 is not true support any more simply because it was support from that seven-year uptrend line. When a trend line is support and no longer exists at that price, then it really isn't much support for the bulls. Because we're so oversold we can bounce from there, or higher, but in the end it isn't true support any longer. We haven't had to deal with support for seven years on big sell offs other than that rising trend line that always held. Now that we're below the market will have to find its own support levels over time. They may create new ones that we're unaware of yet. That is likely, actually. This means for the short-term understanding support may be a bit more difficult. The next few days to weeks should have our focus on whether the bulls can take back the lost trend line. If not, then we can have a deeper understanding of what may be occurring. For now, my best advice would be to be a spectator and not a participant until we understand more. The script still has some work to do for us to have a better handle on what may be taking place.

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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