The market has had every excuse to use economic woes as a reason to fall hard this past week. Poor numbers from the ISM Manufacturing sector, and then a hard decline in the ISM services sector. The market refused to fall, but it was somewhat understandable since the market had taken a massive hit lower and was simply trying to unwind oversold oscillators. The bear flag, if you will, that we have been seeing on all the daily index charts. Today was day fifteen, or exactly three weeks, but it seems as if the fifteenth day was the bad one for the bulls as the market could not withstand the Jobs Report, which came in 34,000 jobs shy of expectations. 151K versus 185K expected. The futures fell initially, only to come roaring back to green for a few seconds ahead of the open. It then began to fall, and, thus, we actually gapped down across the board with the Nasdaq taking the biggest hit. The market tried a few times to come back, but it seemed as if all attempts to rally were sheared off by the bears. They seemed angry today. Enough of these flags seemed to be their mantra for the day, especially in the world of high P/E stocks.

They've played second fiddle to the bulls for a very long time, but have begun to make progress in terms of taking over the primary trend the bulls held for the better part of seven years. The market has held up well considering the global economic situation, even though it was oversold. It could have gotten more so, but seemed alright with just hanging around no matter how bad the news got. Today was sort of that last hope gone away scenario. Most of the important earnings reports are over and too many weren't good enough. With manufacturing and services on the decline that too took away a lot of hope. The Jobs Report seemed to be the icing on the cake. The last straw. Whatever you want to call it, but the market said enough and down she went. Not a crash. Not the end of the world, but more of the bears taking over the landscape from the bulls. It hasn't been and won't be easy, but they are getting things to go their way more frequently now. A true change of the seven-year trend prior. Of course, maybe we should say six years since last year was the churn year where we were down a drop. Any way you slice it, today was not a good day for the bulls as the bears continued their progression to taking things over slowly, but quite surely.

When trying to understand a markets message the best place to look is at froth or the Nasdaq. This is the land of the greatest and most outrageously over valued stocks. You know the story there. In bull markets folks love beta and froth and thus they run to these stocks at every chance. The Nasdaq is the leader no matter what market you're in. When things are good, it well out performs the rest of the market. However, when things are bad it also out performs, but to the down side as those froth stocks get totally taken out and crushed. We have seen the Nasdaq struggle the most even in the current bear flags. Unable to get to moving average or above them the way the Dow and S&P 500 have been able to. So when today's bad Jobs Report hit we immediately saw the Nasdaq lead lower as the fang stocks once again led lower. Add in the reports on earnings from Data and LinkedIn Corporation (LNKD) and things really took off down in comparison to the rest of the market. The lesson on holding stocks in to their earnings reports showing its ugly side today. Some complete Nasdaq stock annihilation. As long as the market is led down by the Nasdaq stocks you can expect the trend lower overall to continue. There will be days when the Nasdaq leads up, but that will be mostly from oversold bounces. The key is a trend, not a day or two. For now, the market has no thirst for anything related to froth or high P/E's. Follow the markets message and you'll survive.

Markets rarely, if ever, crash or fall apart in a moment. Too much in terms of protection out there from all sorts of places from Government intervention to Fed intervention. In fact, most crash days turn out well. You get massive moves back up the same day as everyone who can help out comes to the rescue. Bear markets or down trending markets are usually slow and methodical with the occasional swoon over a few week's period, such as we just saw in January. Most bear markets only have a few or a couple of these types of events. Most of the time is spent moving up and down with a small trend towards lower. The big two or three legs are the crux of the bear in terms of points lost. That happens only over a couple or a few months time. If a bear were to last a year you'd see the worst of it in a very small window of time. Bear markets are often very hopeful for the bulls only to see them get frustrated as sustainable upside is hard to come by. The worst thing for the bulls is the bear-market rallies that last a while as their guard comes down only to get hurt again when the bear reasserts itself. If we lose S&P 500 1869 we then focus bigger picture at 1812, or the most recent lows from the January down trend. 1946 remains important resistance. Day to day with the trend clearly lower but don't forget lots of up days in between.

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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